Which of the Following Statements Is CORRECT

question 28

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.
• E) The amount of debt in its capital structure can under no
• Circumstances affect a company's business risk.

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