Which of the Following Statements Is CORRECT

question 43

Multiple Choice

Which of the following statements is CORRECT?

• A) The factors that affect a firm's business risk are affected by industry characteristics and economic conditions.Unfortunately, these factors are generally beyond the control of the firm's management.
• B) One of the benefits to a firm of being at or near its target capital structure is that this eliminates any risk of bankruptcy.
• C) A firm's financial risk can be minimized by diversification.
• D) The amount of debt in its capital structure can under no circumstances affect a company's business risk.
• E) A firm's business risk is determined solely by the financial characteristics of its industry.

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Definitions:

Murray Bowen

An American psychiatrist known for developing Bowen family systems theory, which views the family as an emotional unit and uses systems thinking to describe the complex interactions in the unit.

Cybernetics

Cybernetics is the study of control and communication in animals, humans, and machines, focusing on how systems self-regulate.

Flow of Information

How data, facts, or messages move and are exchanged between entities or components within a system.

Bowen Family Therapy

A reiteration of Bowenian Family Systems, focusing on intra-family relationships and the complex interplay of emotional forces within the family unit that influence behavior and emotional health.