wk 08 discussion question business risk versus financial risk

In your own words, explain what is meant by business and financial risk. Suppose Firm A has greater business risk than Firm B. Is it true that Firm A also has a higher cost of equity capital? Why or Why not? Explain. (Ross, Westerfield, & Jaffe, 2016).

Reference

Ross, Stephen A., Randolph Westerfield, and Jeffrey F. Jaffe. Corporate Finance. 12th ed.: Capital Structure, Chapter 16. New York: McGraw-Hill, 2016.

 

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