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Ch 25: Financial Risk & Decision-Making

About This Chapter

Check out this chapter on financial risk and decision-making if you're having a hard time understanding these subjects and need help getting through your homework. Our bite-sized lessons are written by professional instructors and make these subjects easy to understand.

Financial Risk & Decision-Making - Chapter Summary

It's easy to study financial risk and decision-making when you have help from this engaging chapter. Our short video lessons cover expected value in probability, risk aversion and the common biases and judgment errors in decision-making. Before you take an important test or quiz, our lesson quizzes and chapter test can help you identify how well you understand these subjects. Use the video tabs feature in the Timeline to quickly access any section of a video that you'd like to see. If you have any questions along the way, reach out to one of our experts through the Dashboard. This chapter has been designed to assist you in achieving these goals:

  • Deal with uncertainty and risk during decision-making
  • Define the agency problem in finance
  • Outline the impact of the utility theory on risk management
  • Discuss quantification of uncertainty via probability models
  • Detail the different types of risk attitudes
  • Provide a definition and examples for the framing effect
  • Explain how framing influences leadership effectiveness
  • Outline risk management in a business case study for Nokia and Ericsson

6 Lessons in Chapter 25: Financial Risk & Decision-Making
Test your knowledge with a 30-question chapter practice test
Dealing with Risk & Uncertainty During Decision Making

1. Dealing with Risk & Uncertainty During Decision Making

Though every person has some experience making decisions, decision making can get more complex at high levels of thinking. This lesson discusses what it means to deal with risk and uncertainty during decision making.

The Agency Problem in Finance: Definition & Examples

2. The Agency Problem in Finance: Definition & Examples

The agency problem can be a really big issue in the finance world. Find out what an agency problem is and look at some real-world examples. Then, test yourself on your new knowledge.

Impact of the Utility Theory on Risk Management

3. Impact of the Utility Theory on Risk Management

This lesson looks at how consumers and businesses make big decisions based on utility theory, as well as on strictly monetary values. The method chosen can have a big impact on the decision and the risk profile of a business.

Framing Effect: Definition & Examples

4. Framing Effect: Definition & Examples

This lesson goes over a well-known cognitive bias known as the framing effect. We'll first go over what it is using common examples and then dive into how it applies to the world of risk management.

Common Biases and Judgment Errors in Decision Making

5. Common Biases and Judgment Errors in Decision Making

In order for companies to be successful they have to be able to learn from their mistakes. One way they can do that is to identify biases and errors that might occur during decision making.

How Framing Influences Leadership Effectiveness

6. How Framing Influences Leadership Effectiveness

We all have our own views and opinions; however, many leaders use special techniques to influence these views and opinions. In this lesson, we will learn about one technique called framing and how it can be an effective tool for many companies.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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