The managers of Apex International accepted a high-variance,low-value project rather than a low-variance,high-value project.When this occurs,mangers are said to have engaged in ________.

Question

Quizplus · Accepted Answer

The scenario described is an example of asset substitution, where managers choose a project with high variance (risk) and low value, potentially at the expense of shareholders, in order to increase the value of the firm's assets (in this case, by taking on riskier projects).

The Managers of Apex International Accepted a High-Variance,low-Value Project Rather