Which of the Following Statements Regarding Financial Risk and Business

question 83

Multiple Choice

Which of the following statements regarding financial risk and business risk is true?

• A) The acceptable level of financial risk for a firm depends on its business risk.
• B) A firm with a greater degree of business risk has the ability to take on more debt.
• C) A firm with a greater degree of financial risk typically takes on less business risk.
• D) Financial risk and business risk are both important but they are not related in any way.
• E) Financial risk is more important for small firms and business risk is more important for large firms.

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Definitions:

Ellis

Refers to Albert Ellis, an American psychologist who developed Rational Emotive Behavior Therapy (REBT), a significant precursor to cognitive-behavioral therapies.

Transference

The process where emotions originally associated with one person are unconsciously shifted to another person in current relationships.

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology.

Therapy

Treatment methods aimed at making people feel better and function more effectively.