Business Risk Is Concerned with the Operations of the Firm

question 81

Multiple Choice

Business risk is concerned with the operations of the firm.Which of the following is not associated with (or not a part of) business risk?

• A) Demand variability.
• B) Sales price variability.
• C) The extent to which operating costs are fixed.
• D) Changes in required returns due to financing decisions.
• E) The ability to change prices as costs change.

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Definitions:

Significant Noncash

Transactions or activities that have a major impact on a company's financial position but do not involve a direct exchange of cash.

Preferred Shares

A class of stock that provides owners with a fixed dividend ahead of the company's common shares and with priority over common shares in asset liquidation.

Note Payable

A formal, written agreement to pay a certain amount of money, typically including interest, to the lender at a future date or on demand.

Write-off

The accounting action of declaring an asset's value as zero, often due to irrecoverable debts or asset devaluation.