Which One of the Following Statements Is Correct in Relation

question 16

Multiple Choice

Which one of the following statements is correct in relation to a firm's short-run financial risk?

• A)Short-run financial risk results from permanent changes in prices due to new technology.
• B)A financially sound firm can become financially distressed as the result of its short-run exposure to financial risk.
• C)Each segment of a business should be responsible for hedging its own short-run financial risk.
• D)Short-run financial risk is defined as temporary price changes which result directly from natural disasters, such as tornadoes, droughts, and floods.
• E)Thus far, hedging techniques have been unsuccessful in reducing short-run financial risk.

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Definitions:

Free Association

A psychoanalytic technique in which a patient says whatever comes to mind for the purpose of revealing unconscious thoughts and feelings.

Aaron Beck

A psychiatrist known for pioneering cognitive therapy, which focuses on changing unhelpful cognitive distortions and behaviors.

Cognitive Therapy

A form of psychotherapy that emphasizes the identification and restructuring of distorted thought patterns.

Behavior Therapy

A type of psychotherapy that focuses on changing undesirable behaviors through conditioning and the application of learning principles.