This Set contains True/False Type and Multiple Choice Question True/False 1 � The art of risk management is to identify risks specific to an organization and to respond to them in an appropriate way. � � � � � � � � � � � � � � � � � � � � � � � � � � � 2 � All levels of an organization do not need to be included in the management of risk in order for it to be � � effective. � � � � � � � � � � � � � � � � � � � � � � � � � � � � 3 � Qualitative Risk Analysis Techniques seek to compare the relative significance of risk facing a project in terms � � of the effect of their occurrence on the project outcome. � � � � � � � � � � � � � � � � � � 4 � Quantitative techniques are used when the likehood of the investment or project achieving its objectives with � � time and budget is required. � � � � � � � � � � � � � � � � � � � � � � � � � 5 � A forward exchange contract requires delivery at a specified future date of one currency for a specific amount � � of another currency. � � � � � � � � � � � � � � � � � � � � � � � � � 6 � Risk tolerance is the degree that one is willing to risk losing some of his original investment in exchange for � � a chance to earn a higher return. � � � � � � � � � � � Multiple Choice 1. � Which of the following best describes risk management? � � a. A formal process to identify risks. � � � � b. A formal process to assess, identify and manage risk. � � c. A formal process to cover up mis-management. � � d. A formal process by the Board to direct operating activities. � � e. None of the above. � � � � � � � � � � � 2 � Which of the following are soft benefits of risk management? � � a. Enhancement of team spirit. � � � b. Proper risk allocation. � � � c. Improved Communications. � � � d. Improved Profits. � � � � e. a and c. � � � � � � � � � � � � 3 � What is the Delphi technique? � � � � � � � � � � � � 4 � Which of the following are tools to manage risk? � � � � � � � � � 5 � Risk management is an essential part of the project and business planning cycle which requires which of the � � following: � � � � � � � � � � � � � � 6 � Market risk refers to: � � � � � � � � � � � � � � � 7 � The proposed risk management assessment system will do all of the following, except: � � � � � � � � � � � 8 � Key components of program management include which of the following: � � � � � � � � � � � 9 � Which of the following are outputs of risk identification � � � � � � � � � � � 10 � Country risk analysis involves assessing which of the following? � � � � � � � � � � � 11 � Monte Carlo simulation does which of the following? � � a. Gives you a practical, virtual simulation. � � b. Does not produce a mathematical model. � � c. Produces a mathematical model. � � d. a & b. � � � � � � � � e. b & c. � � � � � � � � � � � � � � � 12 � Which of the below is the best definition of business risk? � � a. The variability in a firm’s earnings per share that derives from its sales variability in conjunction with fixed � � interest costs and debt service. � � � b. The chance that a business firm will not be able to repay a loan. � � c. The chance that paying the interest due to a firm’s creditors will result in losses to its bond holders. � � d. The variability in a firm’s earnings per share that derives from its sales variability in conjunction with � � fixed operating costs.
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