Chris Was Developing His Divisional Budget for the Upcoming Fiscal

question 46

Multiple Choice

Chris was developing his divisional budget for the upcoming fiscal year. He was fairly confident his total expenses would be $40,000 and his total revenue $60,000; but, in the budget, he understated his revenue and overstated his expenses to make it easier to achieve his goals.
-Chris felt his base pay was too low. By manipulating his budget as he did, his year-end bonus would be higher. Chris was following the ___ model of ethics.

• A) Virtues.
• B) Utilitarianism.
• C) Rights and duties.
• D) Justice.

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Definitions:

Bond's Duration

Bond's duration measures the sensitivity of the bond's price to changes in interest rates, often indicating the average time it takes for a bond to repay its true cost.

Price Volatility

The rate at which the price of a security increases or decreases for a given set of returns, representing the risk of price change.

Bond Swap

The process of selling one bond and purchasing another bond with different characteristics, often for tax optimization or to improve returns.

Active Portfolio Management

A strategy where portfolio managers make regular buy and sell decisions to try to outperform the market or a specific benchmark.