Any Situation in Which One Person Delegates Responsibility to Another

question 30

Multiple Choice

Any situation in which one person delegates responsibility to another is an example of:

• A) red tape.
• B) rule making.
• C) policy implementation.
• D) a principal-agent game.
• E) a standard operating procedure.

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Definitions:

Discounted Payback

A capital budgeting method that calculates the length of time it takes to break even from an investment based on its discounted cash flows.

Profitability Index

A financial tool that calculates the ratio of the present value of future cash flows generated by an investment to the investment’s initial cost, used to assess project attractiveness.

Profitability Index

A financial metric that measures the relative profitability of an investment by dividing the present value of future cash flows by the initial investment cost.

Required Return

The expected return that investors seek from an investment, considering its risk level and the opportunity cost of forgoing other investments.