A Firm Can Affect Its Beta Risk by Changing the Composition

question 63

True/False

A firm can affect its beta risk by changing the composition of its assets and by modifying its use of debt financing, but external factors do not have any bearing on a firm's beta. 

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Definitions:

Cost of Goods Sold

The total cost of materials and labor directly involved in producing goods or services sold during a period.

Beginning Merchandise Inventory

The value of goods on hand at the start of an accounting period for the purpose of sale in the course of business.

Ending Merchandise Inventory

The final value of a company's inventory at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Gross Profit Rate

The ratio of gross profit to net sales, expressed as a percentage, indicating the efficiency of sales relative to the cost of goods sold.