Which of these items will not generally be affected by an increase in the debt ratio?

A) total risk.
B) financial risk.
C) market risk.
D) the firm's beta.
E) business risk.

Question

Which of these items will not generally be affected by an increase in the debt ratio?

A) total risk.
B) financial risk.
C) market risk.
D) the firm's beta.
E) business risk.

Quizplus · Accepted Answer

Business risk is the risk inherent in a firm's operations and is not affected by a change in the debt ratio. Total risk, financial risk, market risk, and the firm's beta are all influenced by changes in the debt ratio.

Which of These Items Will Not Generally Be Affected by an Increase