BU353 Study Guide - Midterm Guide: Forego, Cash Flow, Financial Statement
Document Summary
Bu 353 mid term study guide fall 2015. Material covered: chapters 1 through 10 with the exception of chapter 9. Damage to assets, injury/illness to employees, liability claims and defence costs: indirect losses. Loss of normal profit (net cash flow), higher costs of funds & foregone investment, bankruptcy costs. New question: cost of risk: ???? (multiple choice) Cost of internal risk reduction diversification/investments in education. Cost of residual uncertainty effects on shareholders/stakeholders: distinguish between risk control and risk financing, risk/loss control involves decisions to invest or forego resources to reduce expected losses. Loss prevention reduces the frequency of loss (an extreme example is loss avoidance) Loss reduction reduces the severity of the loss (pre or post loss: risk/loss financing refers to decisions about how to pay for losses if they occur. Retain costs of losses (through reserves, issuing debt/equity or obtaining loans) Transfer cost of losses (through insurance, hedging such as futures/forwards/options/swaps: methods of risk identification.
