Generally the ____ a firm's business risk, the ____ the amount of financial leverage that will be used in the optimal capital structure.
A) greater; greater
B) smaller; less
C) greater; less
D) smaller; greater

Question

Quizplus · Accepted Answer

Greater business risk typically leads to a preference for less financial leverage in a firm's capital structure to avoid adding financial risk on top of already high business risk.

Generally the ____ a Firm's Business Risk, the ____ the Amount

Generally the a Firm's Business Risk, the the Amount