Describe the Basic Characteristics of Forecasts That Managers Should Be

question 67

Essay

Describe the basic characteristics of forecasts that managers should be aware of.

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Definitions:

Default Risk

The risk associated with a borrower failing to make required payments on debt.

Liquidity Risk

The risk that an entity will not be able to meet its financial obligations as they come due because it cannot convert assets to cash quickly.

Deferred Consumption Risk

The risk associated with postponing consumption today in order to invest, with the potential of not having enough resources in the future.

Liquidity Risk

The risk that an entity will not be able to meet its short-term financial obligations due to the inability to quickly convert assets to cash without significant loss.