When the Qualitative Approach to Risk Assessment Is Used,costs Might

question 127

Multiple Choice

When the qualitative approach to risk assessment is used,costs might be estimated using

• A) replacement costs.
• B) service denial costs.
• C) business interruption costs.
• D) All of these answers are correct.

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Definitions:

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often estimated using models like the Capital Asset Pricing Model (CAPM).

Dividend Growth

Dividend growth is the rate at which a company's dividend payments to shareholders increase over time.

SML Approach

Refers to the Security Market Line approach, a graphical representation of the Capital Asset Pricing Model (CAPM), showing the relationship between the expected return of a security and its beta (systematic risk).

Cost of Equity

The return a company needs to generate on its equity investments to compensate its shareholders for taking on the risk of investing.