Question

explain the features of business risk.
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Answer 1

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The term business risk refers to the possibility of inadequate profits or even losses due to uncertainties e.g., changes in tastes, preferences of consumers, strikes, increased competition, change in government policy, obsolescence etc.

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Answer 2

Answer:

Business risks related to response of the firms earning before interest and taxes, or operating profits , to changes in sales . When the cost of capital is used to evaluate investment alternatives , it is assumed that acceptance of the proposed projects will not affect the firms business risk.

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