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1 | |
Which one of these is true?
(Learning Objective 1 Ch 11) |
| | A) | Risk and uncertainty have the same meaning in management accounting |
| | B) | Risk can be calculated as the standard deviation |
| | C) | Risk cannot be measured |
| | D) | A decision tree is not useful when a decision depends on a sequence of linked risky states |
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2 | |
The following data relates to project A. What is expected NPV of the project?  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::_::/sites/dl/free/0077098595/74294/11_02q.gif','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif">_ (0.0K)</a>]]>_
(Learning Objective 2 Ch 11) |
| | A) | £1,340,000 |
| | B) | £694,000 |
| | C) | £1.0 |
| | D) | £6,940,000 |
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3 | |
A company is considering alternative projects and is particularly concerned about risk. The following information relates to the two projects.  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::_::/sites/dl/free/0077098595/74294/11_03q.gif','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif">_ (1.0K)</a>]]>_
Which of the following is true?
(Learning Objective 3 Ch 11) |
| | A) | Project A should be chosen because the spread of outcomes is wider |
| | B) | Project A should be chosen because the spread of outcomes is narrower |
| | C) | Project B should be chosen because the spread of outcomes is wider |
| | D) | Project B should be chosen because the spread of outcomes is narrower |
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4 | |
Which of the following statements is untrue?
(Learning Objective 4 Ch 11) |
| | A) | The maximin criteria assumes that the worst possible outcome will occur |
| | B) | The minimax criteria assumes that the best possible outcome will occur |
| | C) | Minimax and maximin are part of game theory |
| | D) | Game theory applies where it is easy to attach probabilities to outcomes |
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5 | |
Where vital information is missing, which of the following statements is true?
(Learning Objective 6 Ch 11) |
| | A) | It will always be impossible to calculate the value of that information |
| | B) | The optimum strategy is to look at the decisions stage by stage and calculate at each point the value of the proceeding further |
| | C) | Probabilities will have no impact on the calculation of the value of additional information |
| | D) | Even if we could calculate it’s value. The value would have no use. |
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6 | |
Under the ”real options” approach to risk, which of the following statements is untrue?
(Learning Objective 7 Ch 11) |
| | A) | It is based on the “Black-Scholes” model. |
| | B) | It is too complicated to apply to real life situations outside financial options |
| | C) | It doesn’t require the application of sophisticated option theory |
| | D) | It considers the probability of various options available and takes into account these in calculating the NPV of a project |
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7 | |
Regarding the “fuzzy mathematical” approach, one of the following is untrue
(Learning Objective 8 Ch 11) |
| | A) | Fuzzy mathematics is the same as randomness |
| | B) | Individuals have difficulties specifying the preferences with respect to risk |
| | C) | Approximate quantitative variables are allocated approximate values |
| | D) | There is difficulty in identifying correctly the pay-offs of all alternative courses of action |
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8 | |
Which of the following statements is untrue?
(Learning Objective 8 Ch 11) |
| | A) | Probabilities are used by the majority of practitioners |
| | B) | Expected values are used by the majority of practitioners |
| | C) | Linear programming is used by the minority of practitioners |
| | D) | Management accountants do not need quantitative skills to help them interpret computer outputs |
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9 | |
Which of the following statements is true?
(Learning Objective 9 Ch 11) |
| | A) | It’s impossible for organisations to adopt their organisation & control systems to avoid or absorb uncertainty |
| | B) | The contingency approach is irrelevant to management accounting systems design |
| | C) | Different management styles are needed for high/low uncertainty situations |
| | D) | The response to uncertainty should be more mechanistic and less organic |
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2003 A McGraw-Hill Online Learning Centre