The business risk of a firm refers to the ____.
A) results from using fixed-cost sources of funds
B) variability in the price of a firm's securities
C) variability in the firm's operating earnings over time
D) influence of government regulations on business earnings

Question

Quizplus · Accepted Answer

Business risk refers to the variation in a firm's operating earnings over time. This risk is typically influenced by factors such as competition, changes in consumer preferences, and technological advancements. Fixed-cost sources of funds (A) and government regulations (D) can impact a firm's earnings, but they are not directly related to business risk. Variability in the price of a firm's securities (B) is a reflection of market risk rather than business risk.

The Business Risk of a Firm Refers to the ____