Which of the following is NOT related to (or contributes to) business risk? Remember that a company's activities have an effect on its business risk. O The extent to which operating costs are fixed. O The extent to which interest rates on the firm's debt fluctuate. O Input price variability.
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![Which of the following is NOT related to (or contributes to) business risk?
Remember that a company's activities have an effect on its business risk.
The extent to which operating costs are fixed.
The extent to which interest rates on the firm's debt fluctuate.
Input price variability.
Sales price variability.
Demand variability.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb108195a-fe0c-46c4-9ea9-b6ee46db13b8%2F8dbaa317-dcc6-443b-bab7-cb293078bd3b%2F80azb3c_processed.jpeg&w=3840&q=75)
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- You have just received a business valuation report that is dated six months ago. Describe the factors that might have changed during the past six months and, therefore, caused the value of the business today to be different from the value six months ago. Which of these changes affect the expected cash flows, and which affect the discount rate that you would use in a discounted cash flow valuation of this company?Changes in interest rates represent which type of risk in a portfolio: Systematic risk Firm-specific risk Diversifiable risk Random riskIf a borrower takes out an interest-only loan, when are they expected to pay the principal of the loan? only after the borrower refinances as a balloon payment at the end of the loan term They aren't; interest over time will add up to more than the principal amount. in periodic monthly payments
- The business risk of the company is heavily influenced by factors Such as financial characteristics of a firm's industry, particularly the amount of debt used by the average firm in the industry. O Correct WrongEvaluating the credit quality of debt using traditional measures such as ratings are an example of which type of risk? aLiquidity Risk b.Interest Rate Risk c.Credit Risk d.Market RiskWhich of these types of risks increases in strong correlation with a rise in interest rates? Credit Risk Operational Risk Off-Balance Sheet Risk
- A borrower wants to lower the amount of money they pay in interest over the life of a loan. Which of these tactics is best for decreasing the amount of interest the borrower would pay? making payments small enough to create negative amortization never defaulting on a monthly payment making monthly payments on a non- amortized loan making biweekly payments on an amortized loanTrue or False. According to Charlie Munger, the profitability in the reinsurance industry is depressed by the fact that many companies believe it to be an attractive business.Below are four categories of risk and ways that a company is currently handling the risks. Which risk handling options are being used? More than one answer may apply. a. A company is handling its high R&D financial risk by taking on partners and hiring subcontractors. The partners/subcontractors are expected to invest some of their own funds in the R&D effort in exchange for sole-source, long-term production contracts if the product undergoes successful commercialization. b. A company has decided to handle its marketing risks by offering a family of products to its customer base. Different features exist for each product offered. c. A company has product lines with a life expectancy of ten years or more. The company is handling its technical risks by performing extensive testing on new components and performing parallel technical development efforts for downstream enhancements. d. A company has large manufacturing costs for its high-tech products. The company will not…
- Salalah Oil,has a cost of equity capital equal to 22.8 percent. If the risk-free rate of return is 10 percent and the expected return on the market is 18 percent, then what is the firm's beta.You're working with a buyer who wants to make an offer on a house. You check the Flood Insurance Rate Maps and see that the property is located in a V Zone. What should you tell the buyer? This coastal property is not considered a high- risk category on the FIRM maps, so insurance is not required. The property is in a special flood hazard area, and flood insurance will be required if the buyer intends to use a federally insured or regulated lender. The property is in a 100-year flood plain, so flood insurance is encouraged but not required by lenders. The property is considered to be very valuable and is likely to increase in value in the near future.What is conditional value at risk, CVaR?
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