The Extent to Which a Performance Measure Gives Guidance to Employees

question 55

Multiple Choice

The extent to which a performance measure gives guidance to employees about what is expected of them is called

• A)reliability.
• B)validity.
• C)specificity.
• D)acceptability.
• E)strategic congruence.

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Definitions:

Unsystematic Risk

The risk associated with a specific company or industry, which can be mitigated through diversification.

Diversification

A risk management strategy that mixes a wide variety of investments within a portfolio to reduce exposure to any single asset or risk.

Weights

In finance, it often refers to the ratios or percentages assigned to different components of a portfolio or an index, indicating their relative importance.

Expected Return

The anticipated profit or loss of an investment, calculated by taking the average of possible returns weighted by their probabilities.