The risk caused by variations in interest expense unrelated to sales or operating income arising from changes in the level of interest rates in the economy is called:
A) interest rate risk
B) business risk
C) tax risk
D) financial risk

Question

Quizplus · Accepted Answer

Interest rate risk is the risk that arises from fluctuations in interest rates which can affect the cost of borrowing (interest expense) for a company. This risk is not directly related to the company's sales or operating income but is a result of changes in the broader economic interest rates.

The Risk Caused by Variations in Interest Expense Unrelated to Sales