The equity risk derived from the ﬁrm's capital structure policy is called ___________ risk.
A) market
B) systematic
C) extrinsic
D) business
E) ﬁnancial

Question

Quizplus · Accepted Answer

The equity risk derived from the firm's capital structure policy is called financial risk. This type of risk is specific to the company and arises from the way it finances its operations and investments. It is different from market or systematic risk, which affects all companies and is related to broad economic or market factors. Extrinsic risk is not a commonly used term in finance, and business risk refers to the risk arising from a company's operations or industry factors.

The Equity Risk Derived from the ﬁRm's Capital Structure Policy