- CFA Exams
- CFA Exam: Level I 2021
- Study Session 11. Corporate Finance (2)
- Reading 34. Measures of Leverage
- Subject 2. Financial Risk and Financial Leverage
CFA Practice Question
Financial risk arises from ______.
B. the use of debt in the capital structure
C. the extent to which the costs of production are fixed
A. demand (unit sales) variability
B. the use of debt in the capital structure
C. the extent to which the costs of production are fixed
Correct Answer: B
Financial risk arises from the use of debt in the capital structure.
User Contributed Comments 3
| User | Comment |
|---|---|
| kalps | Financial risk is governed by the amount of debt in the firm |
| sarath | Financial risk is governed by hte use of fixed income securities...like debt and preferred stocks. |
| johntan1979 | A: Sales risk C: Operating risk |