Which of the Following Statements Is Correct

question 17

Multiple Choice

Which of the following statements is correct?

• A) A firm's business risk is solely determined by the financial characteristics of its industry.
• B) The factors which affect a firm's business risk are determined partly by industry characteristics and partly by economic conditions.Unfortunately,these and other factors which affect a firm's business risk are not subject to any degree of managerial control.
• C) One of the benefits to a firm of being at or near its target capital structure is that financial flexibility becomes much less important.
• D) The firm's financial risk may have both market risk and diversifiable risk components.
• E) The above statements are all false.

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Definitions:

Portfolio Restructuring

Involves altering the composition of an investment portfolio to align with financial goals, market conditions, or risk tolerance.

Financial Restructuring

The reorganization of a company's financial structure, often involving changes to debt, equity, and assets to address financial challenges.

Organizational Restructuring

The act of reorganizing the structure of an organization to meet new objectives, which often includes changes in responsibilities, operations, and sometimes staff reduction.

Outplacement

A career transition service provided by organizations to help terminated employees find new job opportunities.