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 the statements are correct.

Question

Quizplus · Accepted Answer

The total risk of a company can change over time depending on various factors such as changes in the industry or market conditions, changes in management or ownership, or changes in the company's financial structure.

Answer: B
 Firms that offer many different products and/or services are generally considered more risky because they have a wider range of revenue streams that may be affected by different market conditions or other factors.

Answer: C
 A company can reduce its risk by reducing the amount of money it has borrowed, as the interest payments and debt obligations can be a significant burden and increase the company's overall risk. However, this is not the only way to reduce risk and depends on the company's specific situation.

Therefore, the correct choices are A, B, and C.

Which of the Following Is Correct Regarding the Total Risk