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Business risk is
A) the risk of bad business strategy or management decisions being made
B) the risk that a company will be unable to meet its financial obligations
C) the risk of not being able to close out your position quickly and at a fair price
D) the risk of prices going up or down
E) also known as inflation risk
Step by step
Solved in 3 steps
- Liquidity risk is A) the risk of bad business strategy or management decisions being madeB) the risk that a company will be unable to meet its financial obligationsC) the risk of not being able to close out your position quickly and at a fair priceD) the risk of prices going up or downE) also known as inflation riskWhich of the following is NOT related to (or contributes to) business risk? Remember that a company's activities have an effect on its business risk. Sales price variability. The extent to which operating costs are fixed. Demand variability. O Input price variability. O The extent to which interest rates on the firm's debt fluctuate.Purchasing Power Risk is A) the risk of bad business strategy or management decisions being madeB) the risk that a company will be unable to meet its financial obligationsC) the risk of not being able to close out your position quickly and at a fair priceD) the risk of prices going up or downE) also known as inflation risk
- Inflation, recession, and high interest rates are economic events which are characterized as: A. Company-specific risk that can be diversified away. B. Systematic risk that can be diversified away. C. Diversifiable risk. D. Market risk. E. Unsystematic risk that can be diversified away.1. Refers to the inability of the business to meet its obligations as they mature on account of insufficient resources. A. Default risk B. Interest-rate risk C. Purchasing power risk D. Liquidity risk 2. A type of risk that relates to changes in the prime interest rate which have significant effects on the cost of money but not directly on the liquidity of the business. A. Financial risk B. Interest-rate risk C. Purchasing power risk D. Liquidity risk 3. Refers to the changes in the conditions and those variables affecting the cost of capital, capital structure and also management decisions made to directly influence the market price of a stock. A. Financial risk B. Interest-rate risk C. Purchasing power risk D. Liquidity risk5) A company's stock price jumped when it announced that its revenue had decreased because of the quality issues of its products. This is an example of ________.A) market riskB) unsystematic riskC) systematic riskD) undiversifiable risk
- Factors that influence business risk include except Group of answer choices A)liability uncertainty B)uncertainty about sales volume C)uncertainty about costs D)None of the aboveIf you are in financial hardship, explain what it means. If we suppose that financial hardship occurs, explain how and why financial distress would make a company's stock more hazardous.State whether the following statements are true or false. 8) Trade-Off between Risk-Return is the main principle to maximize the firm value. 9) Reduce inventory and use the proceeds to pay off a part of current liabilities will lead to increasethe quick ratio. 10) Unethical Behavior of the manager includes using the information that not available to the publicto make money.
- Explain how managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits.6. Business risk is that type of risk in which:a) The company is unable to meet its financial obligations.b) The company is unable to distribute dividends.c) There is stability in income and instability in costs.d) The company may not be able to cover its operating costs.A company's stock price jumped when it announced that its revenue had decreased because of the quality issues of its products. This is an example of market risk Ounsystematic risk O undiversifiable risk O systematic risk