although these are multiple choice questions I am asking that you justify your r

Question

although these are multiple choice questions I am asking that you justify your reasoning for the choice.

15. Which of the follow is not a benefit of risk management?
A) diversification
B) clarity of information and historical data
C) increase costs
D) increase shareholder wealth


MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Please provide any back-up of your calculations on a separate sheet of paper so that partial credit can be assigned. You may provide either a Word document or an Excel spreadsheet.
(10 points each)
16. Given the following probability distribution of returns for a specific investment, what is the expected return?

Probability Return
10% -10%
30% 5%
40% 15%
20% 20%

A) 0% B) 9.0% C) 10.5% D) 11.5%


17. A new production plant is estimated to generate revenues annually of $100,000. The taxes on the land are 4,000 per year. The expense of making the widgets is $2,000 per month based on past experience. Due to efficiency, this was reduced 10%. The depreciation of the plant is 50,000 per year. Assuming a corporate tax rate of 40%, what is the net income annually for the plant? __
A) $13,040 B) $13,200 C) $14,640 D) $26,520

Explanation / Answer

15. Which of the follow is not a benefit of risk management?
A) diversification
B) clarity of information and historical data
C) increase costs
D) increase shareholder wealth

A) 0% B) 9.0% C) 10.5% D) 11.5%

A) $13,040 B) $13,200 C) $14,640 D) $26,520

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