Which Two of the Following Best Relate to Business Risk

question 19

Multiple Choice

Which two of the following best relate to business risk and financial risk?

• A) The increased expected return from increasing debt more than compensates for the higher variability resulting in climbing share prices.
• B) The decreased expected return from increasing debt more than compensates for the lower variability resulting in climbing share prices.
• C) Firms with high business risk are in a position to take on higher levels of financial risk than those with low business risk.
• D) Firms with low business risk are in a position to take on higher levels of financial risk than those with high business risk.

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Definitions:

Social Institutions

Established systems of societal organization that structure the activities of groups and individuals, such as family, education, religion, and government.

Significant Others

Are people who play important roles in the early socialization experiences of children.

Socialization

The process by which individuals learn and adopt the norms, values, behavior, and social skills appropriate to their society or social group.

Approval

The act of accepting or endorsing something, often in a formal or official capacity.