Author: Christine Farr


Submit a summary of the article along with your reaction to the article. The article must come from one of the listed learning objectives below. The summary should be a minimum of 1 page and your reaction should also be a minimum of 1 page.
Learning Objectives
Describe the importance of risk exposure from the perspective of a single project
Conduct a simple sensitivity analysis and understand the results
Calculate a break-even point and understand how changes in fixed costs, variable costs, and the selling price influence the break-even point
List some of the ways probability estimates are developed in practice
Explain why total firm risk is important to some shareholders, management, other employees, customers, suppliers, present and potential competitors, and others
Explain why diversification reduces total risk
Calculate the correlation coefficient, the beta coefficient, the covariance between the firm and a proposed capital project
Describe the problems associated with the use of the mean-variance method

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