Which of the following is NOT a way risk management can be used to increase the value of a firm?
A) Risk management can increase debt capacity.
B) Risk management can help a firm maintain its optimal capital budget.
C) Risk management can reduce the expected costs of financial distress.
D) Risk management can help firms minimize taxes.
E) Risk management can allow managers to defer receipt of their bonuses and thus postpone tax payments.

Question

Quizplus · Accepted Answer

Risk management strategies are primarily focused on the financial and operational aspects of a firm, such as increasing debt capacity, maintaining optimal capital budgets, reducing financial distress costs, and minimizing taxes. The deferral of managers' bonuses to postpone tax payments is more related to individual compensation strategies rather than a direct method of increasing the value of a firm through risk management.

Which of the Following Is NOT a Way Risk Management