Which of These Items Will Not Generally Be Affected by an Increase

question 5

Multiple Choice

Which of these items will not generally be affected by an increase in the debt ratio?

• A) Total risk.
• B) Financial risk.
• C) Market risk.
• D) The firm's beta.
• E) Business risk.

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Definitions:

New Capital

Funds raised by a company through issuing new shares or debt to finance its business activities.

Hedge Funds

Investment funds that employ various strategies to earn active return, or alpha, for their investors, often requiring a large initial minimum investment and offering less regulation.

Market-Neutral

Market-neutral is an investment strategy or portfolio designed to neutralize certain market risks by taking offsetting positions, aiming to achieve returns largely independent of the overall market movement.

Risky

Involving exposure to danger or financial loss probabilities.