Which of the Following Are NOT Ways Risk Management Can

question 9

Multiple Choice

Which of the following are NOT ways risk management can be used to increase the value of a firm?

• A) risk management can help a firm maintain its optimal capital budget.
• B) risk management can reduce the expected costs of financial distress.
• C) risk management can help firms minimize taxes.
• D) risk management can allow managers to defer receipt of their bonuses and thus postpone tax payments.
• E) risk management can increase debt capacity.

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Definitions:

Total Assets

The sum of all assets owned by a company, including current, fixed, tangible, and intangible assets, represented on the balance sheet.

Total Equity

Total equity represents the value left for shareholders after all liabilities have been subtracted from the total assets of a company.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets, indicating the leverage and financial health of the company.

Total Assets

The sum of all assets owned by a company, including current, fixed, and intangible assets, indicating the total resources.