Risk Can Be Apportioned Between Financial and Business Risk

question 40

True/False

Risk can be apportioned between financial and business risk.Financial risk and business risk are related in that, as business risk increases so does financial risk, although the correlation between the two is not perfect.

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Definitions:

Valuation of Liabilities

The process of determining the present value of liabilities, often for financial reporting or when entities merge or are acquired.

Impairment of Assets

A reduction in the recoverable value of a fixed asset or goodwill, signifying that its carrying amount exceeds its recoverable amount or market value.

Degree of Control

The extent to which an entity has the power to govern the financial and operating policies of another entity so as to benefit from its activities.