Which of the Following Statements Is Correct

question 39

Multiple Choice

Which of the following statements is correct?

• A) A firm's business risk is determined solely by the financial characteristics of its industry.
• B) The factors that affect a firm's business risk are affected by industry characteristics and economic conditions. Unfortunately, these factors are generally beyond the control of the firm's management.
• C) One of the benefits to a firm of being at or near its target capital structure is that this eliminates any risk of bankruptcy.
• D) A firm's financial risk can be minimized by diversification.

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Definitions:

Albert Bandura

A prominent psychologist known for his work in social learning theory, emphasizing the importance of observing, modelling, and imitating the behaviors, attitudes, and emotional reactions of others.

Self-Efficacy

The perception a person has of his or her ability to perform competently whatever is attempted.

Heritability Of Traits

A measure of how much genetic factors contribute to individual differences in observable traits within a population.

Personality Differences

Variations in the patterns of thinking, feeling, and behaving that distinguish one person from another.