Which of the Following Statements Related to Financial Risk Are

question 54

Multiple Choice

Which of the following statements related to financial risk are correct?
I.Financial risk is the risk associated with the use of debt financing.
II.As financial risk increases so too does the cost of equity.
III.Financial risk is wholly dependent upon the financial policy of a firm.
IV.Financial risk is the risk that is inherent in a firm's operations.

• A)I and III only
• B)II and IV only
• C)II and III only
• D)I, II, and III only
• E)I, II, III, and IV

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Definitions:

Raw Materials

The basic materials that are used in the production process of goods, prior to being processed or transformed.

Direct Labor Budget

A detailed plan that shows the amount of direct labor hours required to meet production needs and the associated costs.

Direct Labor-Hours

Hours attributed to workers who are directly involved in the creation or assembly of a company's products.

Budgeted Production

The planned level of production output, determined as part of a company's budgeting process to meet expected demand and inventory requirements.