In Theory,the Decision Maker Should View Market Risk as Being

question 45

Multiple Choice

In theory,the decision maker should view market risk as being of primary importance.However,within-firm,or corporate,risk is relevant to a firm's

• A) Well-diversified stockholders,because it may affect debt capacity and operating income.
• B) Management,because it affects job stability.
• C) Creditors,because it affects the firm's credit worthiness.
• D) All of the above are correct.
• E) Only answers a and c are correct.

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Definitions:

Financial Capitalism

An economic system where financial markets play a critical role in determining the allocation of capital, the pricing of assets, and the management of economic risks.

Industrial Capitalism

An economic and social system in which trade, industry, and capital are privately controlled and operated for profit.

Fossil-fuel

Natural fuels such as coal, oil, and natural gas, derived from the remains of living organisms and used primarily for energy.

Industrial Order

A social and economic system characterized by the large-scale industrial production and management of goods and services, often associated with the rise of factories and mechanization.