Which of the following would be considered part of a firm's business risk?
A)The firm's default risk
B)The risk that some of the firm's bonds will be repaid prior to their maturities
C)The general liability that is associated with the product line the firm manufactures and sells
D)Risk of loss due to currency fluctuations
E)Interest rate reinvestment risk

Question

Quizplus · Accepted Answer

The general liability associated with the product line a firm manufactures and sells is part of its business risk, as it refers to the risk that the firm may face legal action or compensation claims from customers who suffer harm or loss from its products. The other options, such as default risk, bond repayment risk, currency risk, and interest rate reinvestment risk, are more related to financial risks that may affect the firm's ability to meet its financial obligations or manage its cash flows.

Which of the Following Would Be Considered Part of a Firm's