Which of the Following Is a Risk of Outsourcing Information

question 9

Multiple Choice

Which of the following is a risk of outsourcing information systems?

• A) Vendors can gain access to critical knowledge of the outsourcing company.
• B) Vendors are not subject to a contractual agreement with the outsourcing company.
• C) The long-term costs of information systems are outweighed by their benefits.
• D) Organizations opting for outsourcing cannot gain economies of scale.

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Definitions:

Nominal Rate

The stated interest rate of an investment or loan, not including the effect of compound interest or inflation adjustments.

Monthly Compounded

A method of calculating interest where the interest is added to the principal each month, resulting in interest earned on interest.

Nominal Rate

The stated interest rate of a bond or loan, not adjusted for inflation.

Compounded Annually

A method in which interest is calculated once per year and added to the total sum, affecting the principal for the next period.