Financial risk refers to the impact that a company's financing decisions have on the riskiness of its cash flows. It is related to the use of debt and other financial instruments that can increase or decrease the variability of a company's financial results.

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Financial Risk

Question 26

Multiple Choice

Financial risk:

A) the effect that a company's financing decision has on the riskiness to cash flows.
B) increases a company's business risk.
C) decreases a company's business risk.
D) is related to how debt affects the business decisions of a company.

Correct Answer: