Which of the Following Is a True Statement

question 11

Multiple Choice

Which of the following is a true statement?

• A) The risk and return that a firm experienced in the past is also the risk level for its future.
• B) Firms can quite possibly change their stocks' risk level by substantially changing their business.
• C) If a firm takes on riskier new projects over time, the firm itself will become less risky.
• D) If a firm takes on less risky new projects over time, the firm itself will become more risky.

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Definitions:

Free Trade

Worldwide trading conducted without interference through tariffs, quotas, or restrictions, following its inherent course.

Accounting Profits

The net income of a company calculated by subtracting total expenses from total revenues, following accounting rules.

Natural Monopoly

A market condition where due to high fixed costs or unique resources, a single firm can supply a product or service at a lower cost than any potential competitor, thus dominating the market.