A Firm's Business Risk Depends Upon

question 126

Multiple Choice

A firm's business risk depends upon:

• A) its use of debt in the capital structure.
• B) the risk of the firm's assets and operations.
• C) whether individuals are able to undo the leverage.
• D) the costs of financial distress.

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Definitions:

Owners' Claims

The financial interest or claims that business owners have in the assets of their company, often calculated as equity.

Assets

Economic resources owned or controlled by a business or individual, expected to produce value or benefit in the future.

Investing Activities

Financial actions related to acquiring or disposing of long-term assets and other investments.

Long-term Borrowing

Debt obligations or loans that are due to be repaid over a period longer than one year, often used for large capital investments.