Managers should under no conditions take actions that increase their firm's risk relative to the market, regardless of how much those actions would increase the firm's expected rate of return.

Question

Quizplus · Accepted Answer

Managers are expected to take risks in order to generate higher returns for their firm, but the level of risk should be consistent with the overall market and the firm's risk management strategy. Taking excessive risk that is disproportionate to the market can jeopardize the firm's financial stability and reputation. Therefore, managers should carefully balance risk and return, taking into account market conditions and the firm's capacity to manage risk effectively.

Managers Should Under No Conditions Take Actions That Increase Their