Question
Which of the following statements regarding business risk, financial risk, and investors' risk, is true? Business risk is very similar to the risk of bankruptcy
Which of the following statements regarding business risk, financial risk, and investors' risk, is true?
Business risk is very similar to the risk of bankruptcy and is closely linked to the amount of debt in a firm's financing mix.
Financial risk is associated with the returns earned by equity investors.
Business risk is often measured by the variability of earnings before depreciation and taxes and is closely associated with the risk inherent in the goods and services a business is selling.
Investment risk is the uncertainty associated with a firm's investment projects. It can be thought of as the likelihood that the expected IRR or NPV from an investment project will not materialize.
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