The Business Risk of a fiRm

question 348

Multiple Choice

The business risk of a firm:

• A) Depends on the level of unsystematic risk associated with the assets of the firm.
• B) Is inversely related to the required return on the firm's assets.
• C) Is dependent upon the relative weights of the debt and equity used to finance the firm.
• D) Has a positive relationship with the cost of equity for that firm.
• E) Has no relationship with the required return on a firm's assets according to M&M Proposition II.

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Definitions:

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