Which of the Following Statements Is NOT a Reason for Companies

question 8

Multiple Choice

Which of the following statements is NOT a reason for companies to actively manage risks?

• A)Firms generally have lower transactions costs due to a larger volume of hedging activities.
• B)Nowadays most investors hold well-diversified portfolios.
• C)Managers know more about the firm's risk exposure than outside investors due to asymmetric information.
• D)Firms are more likely to have specialized skills and knowledge required for effective risk management.

---

Definitions:

Resource Dependence

A theory asserting that organizations depend on resources from their environment and must manage dependencies and relationships with those who control those resources.

Higher Status Organization

An organization perceived to have greater prestige, authority, or influence compared to others in a similar sphere.

Association

A connection or relationship between two or more concepts, objects, or people.

Alliance

A formal agreement or partnership between individuals, organizations, or countries to achieve mutual goals.