Financial Planner

Answer: A - Business risk is defined as the variability or uncertainly in a firm’s operating income or earnings before interest and taxes. It is evident from the income statement that variability in earnings per share is affected by business risk. This is the risk inherent in the business, or the risk resulting from the asset side of the balance sheet. Business risks are unique to a single business or industry, such as operations and methods of financing. Investment risk equals total risk equals standard deviation equals systematic risk plus unsystematic risk.