Business risk is related with the operations of the firm.Which of the following is not directly associated with, that is, not a part of, business risk?
A)product demand variability
B)sales price variability
C)relative amount of fixed operating costs
D)degree of price flexibility with respect to changes in operating costs
E)changes in required returns due to financing decisions

Question

Quizplus · Accepted Answer

Changes in required returns due to financing decisions are related to financial risk, not business risk. Business risk is related to the operations of the firm, such as product demand variability, sales price variability, and the relative amount of fixed operating costs. The degree of price flexibility with respect to changes in operating costs can also be considered a part of business risk, as it relates to the ability of the firm to adapt to changes in the market.

Business Risk Is Related with the Operations of the Firm