Financial Risk Refers to The

question 10

Multiple Choice

Financial risk refers to the:

• A) risk of owning financial assets.
• B) overall risk of a financial services firm.
• C) risk faced by the shareholders when debt is used.
• D) risk of not finding finance for a firm's investment.

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Definitions:

Machine-Hours

A measure of production activity that quantifies the number of hours machines are operated in the production process.

Fixed Component

A cost that does not change with the level of output or activity over a particular period of time.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual units of production, based on estimated costs rather than actual costs.

Volume Variance

A measurement of the difference between the actual production volume and the expected (or budgeted) production volume, affecting the costs incurred.