Question
Holding equity in an unlevered firm has no risk.
True false question.
True
False
True false question.
True
False
Answers
GPT-4o mini
False.
Holding equity in an unlevered firm does carry risk. While the absence of debt (leverage) means the firm is not exposed to the risks associated with interest obligations, equity holders still face risks related to the firm’s operational performance, market conditions, and other business risks. Therefore, it is incorrect to say that holding equity in an unlevered firm has no risk.
Holding equity in an unlevered firm does carry risk. While the absence of debt (leverage) means the firm is not exposed to the risks associated with interest obligations, equity holders still face risks related to the firm’s operational performance, market conditions, and other business risks. Therefore, it is incorrect to say that holding equity in an unlevered firm has no risk.