Question 10

Which of the following statements is CORRECT?

	A.	A firms business risk is determined solely by the financial characteristics of its industry.
	B.	The factors that affect a firms business risk include industry characteristics and economic conditions, both of which are generally beyond the firm's control.
	C.	One of the benefits to a firm of being at or near its target capital structure is that this generally minimizes the risk of bankruptcy.
	D.	A firms financial risk can be minimized by diversification.
	E.	The amount of debt in its capital structure can under no circumstances affect a companys EBIT and business risk.