Risk Can Be Apportioned Between Financial and Business Risk

question 40

True/False

Risk can be apportioned between financial and business risk.Financial risk and business risk are related in that, as business risk increases so does financial risk, although the correlation between the two is not perfect.

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Definitions:

Sole Proprietorship

A business owned and operated by a single individual, with no distinction between the business and the owner.

Closely Held Corporation

A type of company that is owned by a small group of people who are usually closely associated with the business.

Publicly Trades

Pertains to companies whose shares are bought and sold on stock exchanges, allowing investors to purchase ownership interests in the businesses.

Auction Market

A market where buyers and sellers enter competitive bids simultaneously; the price is determined by the highest bid received by the seller.