Risk and return - implications for managers and investors the concept of risk and return is subjective for different people, as well as for corporations. read and assess the following financial decisions. keeping everything else constant, are the following actions good financial decisions? base your decisions on the understanding of risk and return, solely from a theoretical finance perspective. joe is an average investor. his financial advisor gave him options of investing in stock a, with a σ of 12%, and stock b, with a σ of 9%. both stocks have the same expected return of 16%. joe can pick only one stock and decides to invest in stock b. good financial decision? yes no the technology boom in the late 1990s enticed everyone. wilson is an average investor, and he invested all his money in technology stocks. good financial decision? yes no erin wants to invest in a hedge fund that has had a very strong performance track record. the hedge fund has given its investors a return of over 60% for the past five years. although erin is tempted to put her money in the fund, she decides to conduct due diligence on the hedge fund’s assets, because she is aware that past performance is no guarantee of future results. good financial decision? yes no

Insurance companies have internal controls in place to protect assets, monitor the accuracy of accounting records and encourage operational efficiencies and adherence to policies. these internal controls are generally of two types: administrative controls and accounting controls. administrative controls are the policies and procedures that guide the daily actions of employees. accounting controls are the policies and procedures that delineate authorizations of financial transactions that are done, safeguard assets, and provide reports on the company’s financial status in a reliable and timely manner. internal controls should include both preventative and detective controls. the purpose of preventative controls is to stop problems and errors before they occur. detective controls identify problems after they have occurred. preventative controls are usually more effective at reducing problems, but they also tend to be more expensive. internal controls must be flexible to adjust for changes in laws and regulations in addition to adding new products or modifying current ones. companies must also do regular analyses to ensure that the benefits of implementing the controls are worth their costs. when concerned about paying unwarranted insurance claims which type of control would be useful?

Selected transactions of the carolina company are listed below. classify each transaction as either an operating activity, an investing activity, a financing activity, or a noncash activity. 1. common stock is sold for cash above par value. 2. bonds payable are issued for cash at a discount

Which of the following is a tax incentive