Debt financing affects neither the business risk nor the financial risk of the firm.

Name: Debt financing affects neither the business risk nor the financial risk of the firm.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Debt financing increases the financial risk of the firm as it involves the obligation to pay interest and principal payments regardless of the firm's profitability. It does not directly affect the business risk related to the firm's operations and market risks.

Debt Financing Affects Neither the Business Risk nor the Financial