If a transfer has no effect on divisional profit,risk-neutral managers will be indifferent between making the transfer or not.

Name: If a transfer has no effect on divisional profit,risk-neutral managers will be indifferent between making the transfer or not.
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Question

Quizplus · Accepted Answer

Since there is no effect on profit, there is no financial risk involved in making the transfer. Therefore, risk-neutral managers would be indifferent between making the transfer or not.

If a Transfer Has No Effect on Divisional Profit,risk-Neutral Managers