Components of financial risk
Not what you're looking for?
What are the components of financial risk? How do companies employ diversification to reduce risk?
Purchase this Solution
Solution Summary
This explains the components of financial risk
Solution Preview
Fianacial risk
The variability of Earning per share caused by use of finnacial leverage is called financial risk.
Operating risk is called variability of EBIT(Earning before interest and taxes)
Financial risk arises because:
1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment.
2. The amount of debt used to finance a firm's assets. A firm with significantly ...
Purchase this Solution
Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Motivation
This tests some key elements of major motivation theories.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.