Financial risk is the additional uncertainty of returns to equity holders due to
A) The firm's use of fixed financial obligations
B) The firm's level of fixed productions costs
C) Business risk
D) a and b.
E) b and c.

Question

Quizplus · Accepted Answer

Financial risk is the uncertainty in returns due to the use of fixed financial obligations such as debt. The firm's level of fixed production costs and business risk are not directly related to financial risk.

Financial Risk Is the Additional Uncertainty of Returns to Equity