Asked by
Javier Stephen
on Dec 09, 2024
Verified
Which of the following correctly completes this sentence: All else the same, _____________.
A) The business risk of a firm increases when it takes on a risky project.
B) The business risk of a firm increases when it takes on more debt.
C) The financial risk of a firm decreases when it takes on a risky project.
D) The financial risk of a firm increases when it takes on more equity.
E) The higher the business risk for a firm, the higher the financial risk as well.
Business Risk
The exposure to factors that may cause a business to experience lower profits or financial loss.
Financial Risk
The possibility of losing money on an investment or business venture due to various factors including market fluctuations, economic conditions, or management decisions.
- Assess the implications of financial leverage on a firm's business risk and financial risk.
Verified Answer
MA
Learning Objectives
- Assess the implications of financial leverage on a firm's business risk and financial risk.
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