Risk that affects all firms is called
A) management risk.
B) nondiversifiable risk.
C) diversifiable risk.
D) total risk.
B
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Indicate whether the statement is true or false
Which of the following is sometimes argued to be the beginning of today's strategic human resource management and high performance workplaces?
A. Industrial unionism. B. Syndicalism. C. Welfare capitalism. D. General unionism.
The expected value with perfect information is:
A) the maximum EMV for a set of alternatives. B) the same as the expected value of perfect information. C) the difference between the payoff under perfect information and the payoff under risk. D) the expected return obtained when the decision maker knows which state of nature is going to occur before the decision is made. E) obtained using conditional probabilities.
Firms U and L each have the same amount of assets, investor-supplied capital, and both have a return on investors' capital (ROIC) of 12%. Firm U is unleveraged, i.e., it is 100% equity financed, while Firm L is financed with 50% debt and 50% equity. Firm L's debt has an after-tax cost of 8%. Both firms have positive net income and a 35% tax rate. Which of the following statements is CORRECT?
A. The two companies have the same times interest earned (TIE) ratio. B. Firm L has a lower ROA than Firm U. C. Firm L has a lower ROE than Firm U. D. Firm L has the higher times interest earned (TIE) ratio. E. Firm L has a higher EBIT than Firm U.