Which of the following correctly completes this sentence: All else the same, _____________.
A) The business risk of a firm increases when it takes on a risky project.
B) The business risk of a firm increases when it takes on more debt.
C) The financial risk of a firm decreases when it takes on a risky project.
D) The financial risk of a firm increases when it takes on more equity.
E) The higher the business risk for a firm, the higher the financial risk as well.

Question

Quizplus · Accepted Answer

The business risk of a firm is related to the inherent risk of its operations and projects. Taking on a risky project increases the business risk, as it affects the firm's operational performance and potential variability in earnings.

Which of the Following Correctly Completes This Sentence: All Else