The uncertainty associated with the use of debt to finance a business enterprise is best described as:
A) financial risk.
B) business risk.
C) operating risk.

Question

Quizplus · Accepted Answer

Financial risk specifically refers to the additional uncertainty and potential for financial loss that a company faces when it uses debt as a means of financing its operations. This is because the company must meet its debt obligations regardless of its financial performance, which can increase the risk of default.

The Uncertainty Associated with the Use of Debt to Finance