The uncertainty of investment returns associated with how a firm finances its investments is known as
A) Business risk.
B) Liquidity risk.
C) Exchange rate risk.
D) Financial risk.
E) Market risk.

Question

Quizplus · Accepted Answer

Financial risk is the uncertainty of investment returns associated with a firm's financing decisions, such as using debt or equity to finance investments. Business risk refers to the uncertainty in operating income due to factors such as competition and market conditions, liquidity risk refers to the uncertainty of being able to buy or sell assets quickly without affecting their market price, exchange rate risk refers to the uncertainty of investment returns due to changes in currency exchange rates, and market risk refers to the uncertainty of investment returns due to broader market forces.

The Uncertainty of Investment Returns Associated with How a Firm