Which of the Following Statements Is CORRECT

question 4

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:

Law of Similars

A principle in homeopathy suggesting that substances causing symptoms in healthy people can treat similar symptoms in sick people.

Symptom

A physical or mental feature that is regarded as indicating a condition of disease, particularly such a feature noticed by the patient.

Substance

Material with particular physical characteristics or chemical composition.

Phantom Limb Pain

Pain that feels like it's coming from a body part that's no longer there, commonly experienced by amputees.