Â The impact of the risk-averse nature of corporate managers on their risk-taking ability. Introduction: Risk-aversion: Risk-aversion is a behavioural response to uncertainty with the willingness to lower or avoid the risk associated with future decisions. The risk-aversive nature of a manager indicates the preference of stability over volatility.

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Answer 1

Question

Chapter 13, Problem 1DQ

Summary Introduction

To explain:Â The impact of the risk-averse nature of corporate managers on their risk-taking ability.

Introduction:

Risk-aversion:

Risk-aversion is a behavioural response to uncertainty with the willingness to lower or avoid the risk associated with future decisions. The risk-aversive nature of a manager indicates the preference of stability over volatility.

Expert Solution & Answer

Answer to Problem 1DQ

The statement that the risk-averse nature of corporate managers implies that they will not take any risk is not completely true. Risk-averse managers will tend to stay away from risk and associate themselves with stability but will also assume risk if such decisions provide higher returns to them.

Explanation of Solution

Risk is a fundamental phenomenon associated with every decision in the business world. No decision can remain risk-free but risk-averse managers tend to lessen it. However, this does not mean that corporate managers are completely reluctant to assume any risk. Corporate managers will take risk provided that the decision results in higher returns. There surely must be some additional benefit or compensation to assume risk to entice risk-averse managers.

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Students have asked these similar questions

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Answer 2

Question

Chapter 13, Problem 1DQ

Summary Introduction

To explain:Â The impact of the risk-averse nature of corporate managers on their risk-taking ability.

Introduction:

Risk-aversion:

Risk-aversion is a behavioural response to uncertainty with the willingness to lower or avoid the risk associated with future decisions. The risk-aversive nature of a manager indicates the preference of stability over volatility.

Expert Solution & Answer

Answer to Problem 1DQ

The statement that the risk-averse nature of corporate managers implies that they will not take any risk is not completely true. Risk-averse managers will tend to stay away from risk and associate themselves with stability but will also assume risk if such decisions provide higher returns to them.

Explanation of Solution

Risk is a fundamental phenomenon associated with every decision in the business world. No decision can remain risk-free but risk-averse managers tend to lessen it. However, this does not mean that corporate managers are completely reluctant to assume any risk. Corporate managers will take risk provided that the decision results in higher returns. There surely must be some additional benefit or compensation to assume risk to entice risk-averse managers.

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Answer 3

Question

Chapter 13, Problem 1DQ

Summary Introduction

To explain:Â The impact of the risk-averse nature of corporate managers on their risk-taking ability.

Introduction:

Risk-aversion:

Risk-aversion is a behavioural response to uncertainty with the willingness to lower or avoid the risk associated with future decisions. The risk-aversive nature of a manager indicates the preference of stability over volatility.

Expert Solution & Answer

Answer to Problem 1DQ

The statement that the risk-averse nature of corporate managers implies that they will not take any risk is not completely true. Risk-averse managers will tend to stay away from risk and associate themselves with stability but will also assume risk if such decisions provide higher returns to them.

Explanation of Solution

Risk is a fundamental phenomenon associated with every decision in the business world. No decision can remain risk-free but risk-averse managers tend to lessen it. However, this does not mean that corporate managers are completely reluctant to assume any risk. Corporate managers will take risk provided that the decision results in higher returns. There surely must be some additional benefit or compensation to assume risk to entice risk-averse managers.

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Answer 4

Question

Chapter 13, Problem 1DQ

Summary Introduction

To explain:Â The impact of the risk-averse nature of corporate managers on their risk-taking ability.

Introduction:

Risk-aversion:

Risk-aversion is a behavioural response to uncertainty with the willingness to lower or avoid the risk associated with future decisions. The risk-aversive nature of a manager indicates the preference of stability over volatility.

Expert Solution & Answer

Answer to Problem 1DQ

The statement that the risk-averse nature of corporate managers implies that they will not take any risk is not completely true. Risk-averse managers will tend to stay away from risk and associate themselves with stability but will also assume risk if such decisions provide higher returns to them.

Explanation of Solution

Risk is a fundamental phenomenon associated with every decision in the business world. No decision can remain risk-free but risk-averse managers tend to lessen it. However, this does not mean that corporate managers are completely reluctant to assume any risk. Corporate managers will take risk provided that the decision results in higher returns. There surely must be some additional benefit or compensation to assume risk to entice risk-averse managers.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 13, Problem 1DQ

Summary Introduction

To explain:Â The impact of the risk-averse nature of corporate managers on their risk-taking ability.

Introduction:

Risk-aversion:

Risk-aversion is a behavioural response to uncertainty with the willingness to lower or avoid the risk associated with future decisions. The risk-aversive nature of a manager indicates the preference of stability over volatility.

Expert Solution & Answer

Answer to Problem 1DQ

The statement that the risk-averse nature of corporate managers implies that they will not take any risk is not completely true. Risk-averse managers will tend to stay away from risk and associate themselves with stability but will also assume risk if such decisions provide higher returns to them.

Explanation of Solution

Risk is a fundamental phenomenon associated with every decision in the business world. No decision can remain risk-free but risk-averse managers tend to lessen it. However, this does not mean that corporate managers are completely reluctant to assume any risk. Corporate managers will take risk provided that the decision results in higher returns. There surely must be some additional benefit or compensation to assume risk to entice risk-averse managers.

Answer 6

Chapter 13, Problem 1DQ

Summary Introduction

To explain:Â The impact of the risk-averse nature of corporate managers on their risk-taking ability.

Introduction:

Risk-aversion:

Risk-aversion is a behavioural response to uncertainty with the willingness to lower or avoid the risk associated with future decisions. The risk-aversive nature of a manager indicates the preference of stability over volatility.

Expert Solution & Answer

Answer to Problem 1DQ

The statement that the risk-averse nature of corporate managers implies that they will not take any risk is not completely true. Risk-averse managers will tend to stay away from risk and associate themselves with stability but will also assume risk if such decisions provide higher returns to them.

Explanation of Solution

Risk is a fundamental phenomenon associated with every decision in the business world. No decision can remain risk-free but risk-averse managers tend to lessen it. However, this does not mean that corporate managers are completely reluctant to assume any risk. Corporate managers will take risk provided that the decision results in higher returns. There surely must be some additional benefit or compensation to assume risk to entice risk-averse managers.

Answer 7

Chapter 13, Problem 1DQ

Summary Introduction

To explain:Â The impact of the risk-averse nature of corporate managers on their risk-taking ability.

Introduction:

Risk-aversion:

Risk-aversion is a behavioural response to uncertainty with the willingness to lower or avoid the risk associated with future decisions. The risk-aversive nature of a manager indicates the preference of stability over volatility.

Answer 8

Expert Solution & Answer

Answer to Problem 1DQ

The statement that the risk-averse nature of corporate managers implies that they will not take any risk is not completely true. Risk-averse managers will tend to stay away from risk and associate themselves with stability but will also assume risk if such decisions provide higher returns to them.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Risk is a fundamental phenomenon associated with every decision in the business world. No decision can remain risk-free but risk-averse managers tend to lessen it. However, this does not mean that corporate managers are completely reluctant to assume any risk. Corporate managers will take risk provided that the decision results in higher returns. There surely must be some additional benefit or compensation to assume risk to entice risk-averse managers.

Answer 12

Ch. 13 - Prob. 1DQ Ch. 13 - Discuss the concept of risk and how it might be...Ch. 13 - When is the coefficient of variation a better...Ch. 13 - Explain how the concept of risk can be...Ch. 13 - If risk is to be analyzed in a qualitative way,...Ch. 13 - Assume a company, correlated with the economy, is...Ch. 13 - Assume a firm has several hundred possible...Ch. 13 - Explain the effect of the risk-return trade-off on...Ch. 13 - What is the purpose of using simulation analysis?...Ch. 13 - Assume you are risk-averse and have the following...

Answer to Problem 1DQ

Explanation of Solution

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