Risk Aversion Is the Behavior Exhibited by Managers Who Require

question 16

Multiple Choice

Risk aversion is the behavior exhibited by managers who require a (n)

• A) increase in return, for a given decrease in risk.
• B) increase in return, for a given increase in risk.
• C) decrease in return, for a given increase in risk.
• D) decrease in return, for a given decrease in risk.

---

Definitions:

Product Costs

Costs that are directly associated with the creation of a product, including direct materials, direct labor, and manufacturing overhead.

Direct Materials

Raw materials that are directly traceable and integral to the finished product in the manufacturing process.

Selling Costs

All costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer.

Indirect Costs

Costs that are not directly traceable to a single product or operation, such as overhead.