Question

The possibility that incorrect decisions are made due to errors in projected cash flows is called...

The possibility that incorrect decisions are made due to errors in projected cash flows is called ________.

Multiple Choice

  • Operating risk.

  • Type I error.

  • Transactional risk.

  • Systemic risk.

  • Estimation risk.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer : Estimation risk

Estimation risk is the possibility that errors in projected cash flows will lead to incorrect decisions OR  it is the possibility that it will lead to bad decision because of errors in the projected cash flows.

Now if cash flows are not correctly estimated, will lead to wrong decisions by finance manager, may lead to firm in bad position in future provided we assume that cash flows were estimated were on higher side.

Operating risk is associated with operational aspects of business for which we find DOL, so it is not correct answer

Type I error is one which takes place when a good project is rejected, so it is not the answer

Transactional risk is associated with export or import transactions.

systematic risk is beta, so no other answer is correct.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The best definition of sensitivity analysis is: Multiple Choice The possibility that errors in projected cash...
The best definition of sensitivity analysis is: Multiple Choice The possibility that errors in projected cash flows lead to incorrect decisions. The determination of what happens to NPV estimates when we ask what-if questions. A combination of scenario and sensitivity analyses. A combination of statistical and probabilistic analysis. Investigation of what happens to NPV when only one variable is changed.
Question) Forecasting risk can be defined as the possibility that _____ will lead to incorrect decisions....
Question) Forecasting risk can be defined as the possibility that _____ will lead to incorrect decisions.     a.   the inclusion of opportunity costs    b.   errors in projected cash flows    c.   the exclusion of sunk costs    d.   erosion    e.   net working capital cost
When a transfer is made between cash and cash equivalents with no gain or loss, how...
When a transfer is made between cash and cash equivalents with no gain or loss, how is the transaction treated in the statement of cash flows? Multiple Choice It is included as an operating activity. It is included as a noncash financing activity. It is included as an investing activity. It is not reported. In a statement of cash flows: Multiple Choice Operating activities can be reported by either the direct method or the operating method. One of the three...
Multiple Choice 11. Prepayment risk is: A. the risk you will not receive the cash flows...
Multiple Choice 11. Prepayment risk is: A. the risk you will not receive the cash flows on a mortgage-backed security B. the risk that you will receive the cash flows sooner than expected and be forced to invest at a lower rate. C. the risk that you will receive the cash flows later than expected and not be able to invest at current, higher rates. 12. Based on the video Inside the Meltdown, it appeared that the main reason Lehman...
What Happens When Hospitals Run out of Ventilators and Other Emergency Rescue Equipment? Patricia Benner, R.N.,...
What Happens When Hospitals Run out of Ventilators and Other Emergency Rescue Equipment? Patricia Benner, R.N., Ph.D., FAAN April 7, 2020 Our overwhelmed, or soon to be overwhelmed hospitals, face rationing precious life-saving equipment, such as ventilators. Our national lack of preparedness for a global pandemic will, in the near future, force local physicians and nurses to ration ventilators and oxygen delivery equipment, for patients and Personal Protective Equipment (PPE) for caregivers. How do health care providers make decisions about...
Review the Robatelli's Pizzeria Case Study. Develop another internal controls system, but this time, in the...
Review the Robatelli's Pizzeria Case Study. Develop another internal controls system, but this time, in the purchases and fixed assets business areas. Prepare a 12- to 16-slide presentation describing the purchases and fixed assets business areas. Be sure to incorporate speaker notes as well as appropriate visuals, graphics, fonts, etc. Include any associated risk in these areas. Describe specific internal controls that include authorization of transactions, segregation of duties, adequate records and documentation, security of assets, and independent checks and...
Please read the article and answear about questions. Determining the Value of the Business After you...
Please read the article and answear about questions. Determining the Value of the Business After you have completed a thorough and exacting investigation, you need to analyze all the infor- mation you have gathered. This is the time to consult with your business, financial, and legal advis- ers to arrive at an estimate of the value of the business. Outside advisers are impartial and are more likely to see the bad things about the business than are you. You should...
What role could the governance of ethics have played if it had been in existence in...
What role could the governance of ethics have played if it had been in existence in the organization? Assess the leadership of Enron from an ethical perspective. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt...
Discuss ethical issues that can be identified in this case and the mode of managing ethics...
Discuss ethical issues that can be identified in this case and the mode of managing ethics Enron finds itself in this case. How would you describe the ethical culture and levels of trust at Enron? Provide reasons for your assessment. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among...
Discuss how the respective organizations’ relations with stakeholders could have potentially been affected by the events...
Discuss how the respective organizations’ relations with stakeholders could have potentially been affected by the events that took place at Enron and how the situation could have been dealt with differently to prevent further damage? THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT