“Normal spoilage is planned spoilage.”Discuss.

Q: Explain the difference between unique risk and systematic risk

A: Answer

Q: Explain the types of risk?

A: Introduction: There is a risk involved in any company decision, and in personal life decisions. In…

Q: What are the sources of risk associated with project development?

A: Variations in returns of an investment from its expected returns are called risk. The risk of an…

Q: How does the Broader Diversification Reduce Risk?

A: Portfolio is a pool of different investments/assets. Investors can categorize the risks in two…

Q: What are risk assessments?

A: Risk assessment means identification of risk faced by a business organization that hampers it from…

Q: “The inspection point is the key to the allocation of spoilage costs.” Do you agree? Explain.

A: Spoilage: Spoilage is the defective item at intermediate or final stage. The spoilage goods cannot…

Q: What does the equipment replacement investment decision involve?

A: Equipment replacement investment decision is an important form of capital budgeting decisions. In…

Q: Explain Contraction risk?

A: Contraction risk may be a hazard that the backer of fixed-revenue securities faces. This hazard…

Q: Discuss some of the techniques available to reduce risk exposures.

A: Risk exposure is the estimated potential loss from ongoing or upcoming business operations. The…

Q: Why do we need stress testing and scenario analysis?

A: A stress test or scenario analysis is used to determine and analysis the outcome of a financial…

Q: What is event risk?

A: Event risk is the likelihood of a sudden event adversely affecting an organization, industry, or…

Q: Define diversifiable risk

A: Diversifiable risk It is special to a given business or industry. Regularly known in the feeling of…

Q: What type of Risks are exists in the conversion cycle?

A: Cash conversion cycle (CCC) CCC is a tool for tracking the time the company spends to get the cash…

Q: Explain risk-neutral valuation

A: A risk-neutral valuation is a probability measure used to help pricing derivatives and other…

Q: What happens when Control Risk is below the maximum level?

A:

Q: How can break-even analysis be helpful in evaluating project risk

A: Break even analysis helps us in determining that level of sales at which the company is at a point…

Q: What is risk and give examples

A: While making investment decisions risk and return should be taken into consideration.

Q: What is the nature of research and development costs?

A:

Q: Is funding a type of risk?

A: Funding means providing the funds to the party and charging interest rates from them. Firms need…

Q: Why sunk cost should not be considered when evaluating a project?

A: Sunk cost is a cost that has incurred , and which cannot be recovered.

Q: “What has been regarded as normal spoilage in the past is not necessarily acceptable as normal…

A: Spoilage:   Spoilage is the defective item in an intermediate or final stage. The spoilage goods…

Q: How do the passive losses rules and the at risk rules work in conjunction to limit losses?

A: Passive losses: These are the losses that take place when expenses exceed the income in the passive…

Q: Describe the potential costs and benefits of LBOs?

A: LBO is the acquisition method where the company used to use the borrowed money in order to acquire…

Q: “Total input includes abnormal as well as normal spoilage and is, therefore, inappropriate as a…

A: Inventory shrinkage: It represents the loss of inventory. In other words, it refers to the…

Q: What are the risks that exist in the conversion cycle and the changes needed to reduce the risks?

A: The risks involved in the current system of the conversion cycle are as given below: There can be a…

Q: How can diversification reduce risks? Give examples from the rea world

A: Diversification is the process of managing risk which mixes the individual investments in a…

Q: What does a project’s stand-alone risk reflect?

A: Stand alone risks are risks that are associated with a particular asset or a project. Companies when…

Q: What are some possible reasons that a project might have a high NPV?

A: The question is based on the concept of capital budgeting techniques. The Net present value (NPV) is…

Q: Discuss some of the techniques available to reduce risk exposure.

A: Risk exposure means possible losses which can be occur in future due to specific projects or…

Q: Define the term risk?

A: Types of risk: Investment risk Market risk Inflation risk Business risk Liquidity risk

Q: How can we determine whether the project under consideration is of normal risk?

A: Introduction: Risk is nothing but the variation in real returns obtained as opposed to expected…

Q: Explain Measures of Variance and Risk?

A: Variance tests normal or normal variability. Variability is volatility for investors, and volatility…

Q: Explain Broader Diversification Reduces Risk?

A: The investment in different financial assets is known as the portfolio of an investor. The…

Q: How to minimize or eliminate risk using diversification or other means.

A: Diversification is a process investment in multiple assets with the available amount.

Q: What are the two stages in risk assessment?

A: Risk assessment is the process which involves analysis & identification of events that can have…

Q: Discuss the use of sensitivity analysis as a way of evaluating project risk.

A: Sensitivity analysis Sensitivity analysis is said to be an evaluation tool that makes an assessment…

Q: It is possible to eliminate all risk by diversification? Explain your answer

A: Diversification is a technique used to reduce risk by investing in variety of assets. It is a risk…

Q: What are the characteristics of an effective recovery strategy in the event of a disaster?

A: Technological advancements in business have increased the potential risk to business. Its existence,…

Q: What is a feasibility study?

A: Feasibility study is a scientific program. Venture achievement proportion  is decided by Project…

Q: Define a risk event.

A: Risk Event:  When an event can cause losses to the company's stakeholders and investors due to…

Q: Discuss how diversification can enhance risk reduction?

A: Introduction : Diversification can be understood as the act of distributing resources in such a…

Q: “The unit cost of normal spoilage is the same as the unit cost of abnormal spoilage.”Do you agree?…

A:

Q: What are the risks associated with conversion cycle and changes need to reduce that risks?

A: Cash conversion cycle The cash conversion cycle is a method that tracks the time a company would…

Q: The type of the risk that can be eliminated by diversification is called

A: the type of the risk that can be eliminated  by diversification is called