Business risk is affected by a firm's operations.Which of the following is NOT associated with (or does not contribute to) business risk?
A)demand variability
B)input price variability
C)the extent to which operating costs are fixed
D)the extent to which interest rates on the firm's debt fluctuate

Question

Quizplus · Accepted Answer

The extent to which interest rates on the firm's debt fluctuate is not associated with business risk because it is a financial risk, which is separate from the risk inherent in a firm's operations. Factors such as demand variability, input price variability, and the extent to which operating costs are fixed are all associated with business risk because they directly affect a firm's profitability and ability to generate revenue.

Business Risk Is Affected by a Firm's Operations