Which One of the Following Statements Concerning Risk Is Correct

question 164

Multiple Choice

Which one of the following statements concerning risk is correct?

• A) The financial risk of a firm is NOT affected by the capital structure of that firm.
• B) An international firm has less exchange rate risk than a national firm.
• C) A firm can lower its financial risk by lengthening the term of its debt.
• D) The goal of financial engineering is to totally eliminate the financial risk of a firm.
• E) A firm can reduce its financial risk by combining various types of operations.

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Definitions:

Vertical Axis

In a graph or chart, this is the y-axis, which typically shows the range of values for a dependent variable.

Horizontal Axis

In a graph, this axis typically represents the independent variable or the variable that is being manipulated or changed.

U-shaped

Describes a situation or pattern resembling the shape of the letter "U," often used to describe certain types of economic recoveries or performance graphs.

Market Interest Rate

The prevailing rate at which borrowers can obtain loans and lenders can offer funds in the financial market.