Which One of the Following Statements Is Correct in Relation

question 16

Multiple Choice

Which one of the following statements is correct in relation to a firm's short-run financial risk?

• A)Short-run financial risk results from permanent changes in prices due to new technology.
• B)A financially sound firm can become financially distressed as the result of its short-run exposure to financial risk.
• C)Each segment of a business should be responsible for hedging its own short-run financial risk.
• D)Short-run financial risk is defined as temporary price changes which result directly from natural disasters, such as tornadoes, droughts, and floods.
• E)Thus far, hedging techniques have been unsuccessful in reducing short-run financial risk.

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Definitions:

Muscular Layer

A layer of tissue composed of muscle fibers that can contract, found in various organs and structures in the body.

Blood Volume

The total amount of blood circulating within an organism's vascular system.

Atrium

Chamber; particularly an upper chamber of the heart, lying above a ventricle.

Ventricle

Cavity in an organ, such as a lower chamber of the heart or the ventricles of the brain.