Analysts deciding between investments must consider the comparative risks.Which of the following factors affect the risk of business firms?
A)Economy-wide factors, such as increased inflation or interest rates, unemployment, and recessions.
B)Industry-wide factors, such as increased competition, lack of availability of raw materials, changes in technology, and increased government regulatory actions, such as anti-trust or clean environment policies.
C)Firm-specific factors, such as labor strikes, loss of facilities due to fire or other casualty, and poor health of key managerial personnel.
D)The amount of liquid resources available to the firm to run smoothly and effectively.
E)all of the above

Question

Quizplus · Accepted Answer

All of the listed factors (A, B, C, and D) can affect the risk of business firms and must be taken into consideration when making investment decisions. Economy-wide factors such as inflation and recession can affect the overall market and impact business firms. Industry-wide factors such as competition and changes in technology can affect the specific industry in which the firm operates. Firm-specific factors such as labor strikes or key personnel leaving can significantly impact a company's performance. The amount of liquid resources available to the firm also affects its risk level, as lack of resources could result in difficulties in meeting financial obligations or continuing operations.

Analysts Deciding Between Investments Must Consider the Comparative Risks