All CPA Business Environment and Concepts (BEC) Resources
Example Questions
Example Question #1 : Risk Management
Probability (risk) analysis is:
An extension of sensitivity analysis
Used only for situations in which the summation of probability weights is greater than one
Used only for situations involving five or fewer possible outcomes
Incompatible with sensitivity analysis
An extension of sensitivity analysis
Probability analysis is an extension of sensitivity analysis.
Example Question #2 : Risk Management
Which of the following factors is inherent in a firm's operations if it utilizes only equity financing?
Marginal risk
Business risk
Interest rate risk
Financial risk
Business risk
Business risk represents the risk associated with the unique circumstances of a particular company, as they might affect the shareholder value of that company.
Example Question #3 : Risk Management
If an investor's certainty equivalent is greater than the expected value of an investment alternative, the investor is said to be:
Cautious
Risk averse
Risk indifferent
Risk seeking
Risk seeking
If an investor's certainty equivalent is greater than the expected value of an investment alternative, the investor is said to be risk seeking.
Example Question #1 : Risk Management
The mission and vision of an organization most closely relate with its:
Strategy
Practices
Culture
Capabilities
Strategy
Mission and vision are keywords associated with a firm's strategy.
Example Question #5 : Risk Management
The performance component of COSO's ERM framework is supported by which of the following principles?
Defines risk appetite
Establishes operating structure
Analyzes business context
Identifies risk
Identifies risk
Identifies risk is included under the umbrella of performance.
Example Question #6 : Risk Management
Proper risk management includes all of the following except:
Ensuring proper internal controls
Well balanced risk tolerance
Secure levels of safety stock
Well compensated employees
Well compensated employees
While choosing to compensate workers additionally is a good faith action, it does not assist in proper risk management.
All CPA Business Environment and Concepts (BEC) Resources
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