FDM Week 8

Risk is important to consider because of all the following EXCEPT?

• The long timescale involved

• The size of the investment

• The popularity of the investment

• The uncertainty of future occurences

All the following are risk profile of investors EXCEPT?

• Risk seeking

• Risk management

• Risk Averse

• Risk neutral

What are divisible projects?

• An even number of projects

• Projects which can be undertaken in parts and provide proportionate returns

• Projects that when divided result in zero

• Projects that when divided result in a whole number

Which of the following methods can be used to help decision making on divisible projects?

• Divisibility index

• Marginality index

• Profitability index

• Financial index

Managers should aim to _ the present value per $ of scarce resources?

• Maximise

• Minimise

• Itemise

• Compromise

Which of the following is NOT a risk factor to use in scenario analysis that affects the sensitivity of NPV calculations?

• Sales price

• Sales volume

• Operating costs

• Competitors' price

What is business risk?

• The chances of a company becoming an international brand

• The risk of a business earning too much

• The exposure a company has that may increase its profits

• The exposure a company has that may lower its profits

The risk seeking investor's position about risk in investments is?

• Maximise his returns

• Indifferent about the risk

• Prefers certainty

• Will not take any risk

The risk neutral investor's position about risk in investments is?

• Maximise his returns

• Indifferent about the risk

• Prefers certainty

• Will not take any risk

The risk averse investor's position about risk in investments is?

• Maximise his returns

• Indifferent about the risk

• Prefers certainty

• Will not take any risk