________ and operating risk are one in the same and are reflected in the projected variability of the earnings of the firm regardless of how the firm is financed.
A)Business risk
B)Financial risk
C)Exchange rate risk
D)Risk of equity

Question

Quizplus · Accepted Answer

Business risk refers to the inherent variability in the earnings of a firm due to factors such as competition, changes in consumer preferences, and technological advancements. This risk is independent of the firm's financing decisions and is reflected in the projected variability of earnings. Financial risk, on the other hand, is the additional variability in earnings that arises from the use of debt financing. Exchange rate risk refers to the risk of financial loss due to fluctuating exchange rates in international business transactions. Risk of equity is the risk associated with holding equity investments, such as stocks, and is also separate from business risk. Therefore, A) Business risk is the best choice.

________ and Operating Risk Are One in the Same and Are