All of the Following Are Correct Statements Regarding Business Risk

question 71

Multiple Choice

All of the following are correct statements regarding business risk and financial instruments except for:

• A)Business risks associated with financial instruments will vary depending of the aggressiveness of a company's investing activity.
• B)Business risk will be higher for companies investing in less liquid securities.
• C)Financial services firms are exposed to very little risk with their financial instruments.
• D)Business risk for a company will be higher when investments represent a greater proportion of total assets.

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Definitions:

Industry Curve

A graphical representation showing how the average costs of production change as the total output of an industry changes.

Private Bargaining

The process of negotiating terms directly between parties without external intervention.

Externality

An outcome from economic behavior that impacts individuals not directly involved, which may be beneficial or harmful.

Initial Assignment

The initial distribution or allocation of tasks, responsibilities, or resources at the start of a project or process.