If a company is financed entirely by equity then variations in the return to shareholders are attributable only to:
A)financial risk.
B)business risk.
C)technology risk.
D)diversifiable risk.

Question

Quizplus · Accepted Answer

Variations in the return to shareholders are solely due to business risk if the company is financed entirely by equity. Business risk pertains to the fluctuations in the company's profits or earnings due to factors such as competition, changes in market demand, operational inefficiencies, etc. Financial risk, technology risk, and diversifiable risk are not applicable in this context as they arise due to factors such as financial leverage, changes in technology or product innovation, and the specific risks related to individual investments, respectively, which do not apply in a scenario where a company is financed entirely by equity.

If a Company Is Financed Entirely by Equity Then Variations