Question

Under the risk factor of financing decision, the risk associated with different sources is _________.

• A. same
• B. different
• C. higher
• D. lower

Answer 1

Answer: (B)

different

The primary goal of both investment and financing decisions is to maximize shareholder value. Investment decisions revolve around how to best allocate capital to maximize their value. Financing decisions revolve around how to pay for investments and expenses. Companies can use existing capital, borrow, or sell equity.

Risk factor for financing decision, the risk associated with different sources is different because every source is different with diff interest, payback period,profitability index etc.