Question

Difference between business risk and financial risk of financial management

Answer 1

1- Business risk involves operational decisions, while financial risk involves financing choices regarding how an organization is to be funded.

2 -Business risk can be reduced through the use of well-grounded decisions, while financing risk can be reduced by altering the financing mix to favor equity over debt.

3 -Business risk alters income from operations, while financial risk alters net income.

4 -Business risk is not impacted when interest rates change, whereas financial risk will increase markedly as interest rates rise and decline when rates fall.

it is given in points

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