Which of the following is correct regarding the total risk of a company?
A)A company can change its risk level over time.
B)Some firms are riskier because they offer many different products and/or services.
C)Companies can change their risk by reducing the amount of money they have borrowed.
D)None of these statements is correct.

Question

Quizplus · Accepted Answer

A company's risk level can change over time due to changes in the market, industry, or internal factors. For example, a company may introduce a new product or enter a new market that increases its risk level. Alternatively, a company may implement strategies that reduce its risk level, such as diversifying its product line or improving its financial position.

Answer: B
 Firms that offer many different products and/or services are generally riskier because they are exposed to a wider range of market conditions and customer preferences. For example, a company that specializes in one product may be less risky than a company that offers several products in different markets.

Answer: C
 A company can change its risk by reducing the amount of money it has borrowed, which can improve its financial position and reduce its dependence on external financing. However, this may also limit the company's growth potential and reduce its investment opportunities. Therefore, reducing debt may not always be the best strategy for reducing risk.

Therefore, the correct answers are A and B.

Which of the Following Is Correct Regarding the Total Risk