Business risk declines as the systematic risk of a ﬁrm's assets increases.

Name: Business risk declines as the systematic risk of a ﬁrm's assets increases.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Business risk increases as the systematic risk of a firm's assets increases, not the other way around. The systematic risk is a measure of the overall market risk and cannot be diversified away, whereas the business risk is specific to the operations of the firm and can be reduced through diversification.

Business Risk Declines as the Systematic Risk of a ﬁRm's