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26 June, 12:02

Financial risk refers to the extra risk stockholders bear as a result of the use of debt as compared with the risk they would bear if no debt were used. A. TrueB. False

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  1. 26 June, 12:25
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    A. True

    Explanation:

    A financial risk is the risk that could arise through borrowing. If an entity borrows money, it will have to pay the money back at some time, and will also have to pay interest. The risk is that if an entity borrows very large amounts of money, it might fail to generate enough cash from its business operations to pay the interest or repay the debt principal.

    So based on the above discussion, the answer is A. True
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