Stockholders Manage Risk by

question 34

Multiple Choice

Stockholders manage risk by

• A)electing the board of directors.
• B)appointing day-to-day managers.
• C)diversifying their portfolios.
• D)having lots of bonds in their portfolios.

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Definitions:

Total Revenues

The overall income generated by a firm or economy from its business activities, including sales of goods and services, before any expenses are deducted.

Marginal Returns

The additional output that is produced by using one more unit of a variable resource, keeping all other inputs constant.

Nonlabor Resources

are inputs in the production process that are not related to work or effort by employees, such as capital, land, and materials.

Diminishing

Refers to the principle where increasing one input, while holding others constant, will eventually yield lower per-unit returns.