Question

Which of the following is NOT associated with (or does not contribute to) business risk? Recall that business risk is affected by a firm's operations. Select one: a. Sales price variability. b. The extent to which operating costs are fixed. c. The extent to which interest rates on the firm's debt fluctuate. d. Input price variability. e. Demand variability.

Answer 1

Answer:

The correct answer is letter "C": The extent to which interest rates on the firm's debt fluctuate.

Explanation:

Interest rates on debts are the amounts of money the company must pay after requesting loans or assets on credit. Interest rates are fixed and they are specified at the moment of accepting the transaction that will generate the debt in the organization. Thus, they do not represent a risk for the company.