Where Budget Targets Have Proven to Be Unrealistically Optimistic, Management

question 17

Multiple Choice

Where budget targets have proven to be unrealistically optimistic, management is best advised to:

• A)revise budgets to match actual results.
• B)revise budgets into the realm of achievability.
• C)insist that junior management conform to budgets.
• D)ignore budgets and allow managers to use their own initiative.

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Definitions:

Normally Distributed Returns

A pattern in the investment world where the returns of a financial instrument are symmetrically distributed around the mean.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion in a set of data points.

Risk-free Asset

An investment that is assumed to have no risk of financial loss, typically represented by government bonds.

Nominal Terms

Values or figures that have not been adjusted for inflation, representing current prices or values.