Which of the Following Statements Regarding Risk Measures Is INCORRECT

question 1

Multiple Choice

Which of the following statements regarding risk measures is INCORRECT?

• A) A risk measure is a positive real valued function that quantifies the "risk" to changes in a firm's equity capital-losses-over some time period.
• B) Examples of risk measures include the maximum loss,the expected loss,and the value-at-risk.
• C) Artzner,Delbaen,Eber,and Heath (1999)identified four different properties or axioms that a good risk measure should satisfy.
• D) A risk measure satisfying Artzner,Delbaen,Eber,and Heath (1999)four axioms is called a coherent risk measure.
• E) Value-at-risk is the best risk measure because it satisfies all four properties above.

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Definitions:

Departmental Predetermined Rates

Rates used to allocate departmental overhead costs, established in advance based on expected costs and activity levels.

Machine-Hours

A measurement unit representing the operational time of a machine, typically used in manufacturing to allocate costs based on usage.

Selling Price

Selling Price is the amount a buyer pays to purchase an item or service from a seller.

Predetermined Overhead Rate

An estimated charge used to apply manufacturing overhead to individual products or job orders, calculated in advance of the period.