3. Understanding business financial risks The total risk in a firm is determined by evaluating the firm's business risk and financial risk. As an analyst, Olivia is comparing two nearly identical manufacturing firms: Atherton Aeronautics Co. and Universal Space Inc. It is your job to evaluate the relative business and financial risks of Atherton and Universal. The two firms have the same level of total assets and expected net operating profit after taxes (NOPAT), but they differ on two critical characteristics: total debt and the standard deviation of expected NOPAT. The following table outlines some of Atherton's and Universal's characteristics: Universal Atherton $4,400,000 Total assets 2,200,000 Total debt Expected NOPAT Standard deviation of expected NOPAT $4,400,000 880,000 1,056,000 189,200 1,056,000 294,800 Use the given financial data to indicate which firm has the higher degree of each type of risk. Which firm has more business risk? O Atherton Aeronautics Co. Universal Space Inc. Which firm has more financial risk? O Universal Space Inc. O Atherton Aeronautics Co