Which of the Following Is the Best Definition of fiNancial

question 361

Multiple Choice

Which of the following is the best definition of financial risk?

• A) A legal proceeding for liquidating or reorganizing a business. Also, the transfer of some or all of a firm's assets to its creditors.
• B) The direct and indirect costs associated with going bankrupt or experiencing financial distress.
• C) The equity risk that comes from the financial policy (i.e., capital structure) of the firm.
• D) The use of personal borrowing to change the overall amount of financial leverage to which the individual is exposed.
• E) The difficulties of running a business that is experiencing financial distress.