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.

---

Definitions:

Monetary Value

The value of a good or service determined by the amount of money that it can be traded or sold for in a market.

Demographic Characteristics

Refers to the statistical data of a population that include age, race, gender, income, migration patterns, and population growth.

Poverty Rate

The percentage of the population living below the national poverty line, reflecting those who cannot meet basic needs for food, shelter, and clothing.

Social Class

A division of a society based on social and economic status, affecting people's life chances, access to resources, and cultural practices.