Which of the Following Statements About Financial Risk Is Incorrect

question 25

Multiple Choice

Which of the following statements about financial risk is incorrect?

• A) A rise in interest rates will adversely affect the cost of a corporation's variable debt.
• B) If a corporation imports goods from overseas then an appreciation in the exchange rate will adversely affect the company's profits.
• C) If a company (A) has sold goods to another company (B) with payment due in 30 days but company B has gone into liquidation then company A faces credit default.
• D) If a company breaches its debt-to-equity ratio loan covenants the value of the company may be adversely affected.

---

Definitions:

Urine Production

The physiological process by which kidneys filter blood to remove waste products and excess substances, resulting in the formation of urine.

Micturition Reflex

A reflex leading to the urge to urinate, initiated by the stretching of the bladder.

Urinary Bladder

A muscular sac in the pelvis that stores urine from the kidneys before it is excreted out of the body through urination.

External Urinary Sphincter

A muscular mechanism that controls the retention and release of urine from the bladder.