Systematic Risk Applies to Levered fiRms but Not to Unlevered

question 385

True/False

Systematic risk applies to levered firms but not to unlevered firms.

---

Definitions:

Commodity Prices

The market prices for raw materials or primary agricultural products that are traded on exchanges.

Exchange Rates

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.

Interest Rates

The cost of borrowing money or the return earned on an investment, usually expressed as a percentage.

Inflation

The rate at which the general level of prices for goods and services is rising, and, consequently, purchasing power is falling.