Which of the Following Statements Is CORRECT

question 44

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 include industry characteristics and economic conditions,both of which are generally beyond the firm's control.
• C) One of the benefits to a firm of being at or near its target capital structure is that this generally minimizes the risk of bankruptcy.
• D) A firm's financial risk can be minimized by diversification.
• E) The amount of debt in its capital structure can under no circumstances affect a company's EBIT and business risk.

---

Definitions:

Pfaffmann

A researcher known for his contributions to the field of psychobiology, particularly in taste and the neural mechanisms of appetite.

Spencer

Refers to Herbert Spencer, a 19th-century philosopher known for his contributions to evolutionary theory and social philosophy.

Young

Being in the early stages of life, development, or existence; not old.

Hedonism

A philosophy or lifestyle focused on seeking pleasure and avoiding pain as the highest good or main goal of life.