Which of the Following Statements About the Various Types of Risks

question 24

Multiple Choice

Which of the following statements about the various types of risks is true?

• A)A firm's default risk is a nondiversifiable risk.
• B)Interest rate risk is an unsystematic risk.
• C)Inflation risk is a systematic risk.
• D)Economic risk is a firm-specific risk.
• E)Political risk is a diversifiable risk.

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Definitions:

Continuous Budgets

Budgets that are continuously updated by adding a new budget period as the last one is completed, thus always having a full period's financial plan.

Communicating Objectives

The process of clearly and effectively sharing goals and targets with relevant stakeholders or team members.

Ending Inventory

The total value of all inventory still available for sale at the end of an accounting period, calculated by adding new purchases to beginning inventory and subtracting the cost of goods sold.

Ethical Budgeting

The practice of creating budgets that reflect moral principles and considerations, ensuring resources are allocated in a fair and responsible manner.