Long-Run Financial Risk

question 90

Multiple Choice

Long-run financial risk:

• A) Includes conditions such as low grain prices in a particular year.
• B) Is easier to hedge over time than short-run financial risk.
• C) Is related more too near-term transactions than to advancements in technology.
• D) Generally results from changes in the underlying economics of a business.
• E) Can generally be hedged such that the financial viability of a firm is protected.

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Definitions:

World Prices

The international market prices of goods and services, influenced by factors such as supply, demand, and trade policies.

Absolute Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than any other production entity.

Comparative Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.

Production Relationships

Production relationships refer to the connections and interactions between inputs used in the production process and the resulting outputs.