Which statement is true?

A. As macro risks apply to essentially all businesses in a country, all industries are equally sensitive to all economic risk factors.
B. To mitigate the impact of cyclicality, firms may try to stabilize revenues by hedging or to minimize variable costs through outsourcing.
C. The higher the Herfindahl-Hirshman Index, the more competitive the industry.
D. Product market risk is not generally a consideration for mature businesses.

Correct Answer: D

A is false. Some are less while some are more sensitive to economic activity levels.

B is false. They may try to minimize fixed operating costs, not variable costs.

C is false. It is an index that measures the market concentration of a given industry. A low degree of concentration means that the industry is closer to a perfect competition scenario, where many firms of more or less equal size share the market.

D is true. The risk is usually high for a new product.