Two firms, although they operate in different industries, have the same expected earnings per share and the same standard deviation of expected EPS.Thus, the two firms must have the same business risk.

Question

Quizplus · Accepted Answer

Business risk depends on factors such as competition, market conditions, and government regulations, which can vary across industries. Therefore, even if two firms have the same expected EPS and standard deviation, they may not necessarily have the same business risk due to differences in industry-specific factors.

Two Firms, Although They Operate in Different Industries, Have the Same