Question

Which of the following factors would tend to reduce a firm's business risk? Group of answer choices The firm changes its operations to make them more cyclical. The firm increases its operating leverage. The firm increases the fixed costs that are associated with the manufacture of its products. The firm shifts its sales strategy in an effort to sell substantially more high-priced durable goods than low-priced staple goods, which reverses the sales trend that occurred during the past decade. The firm takes actions to improve the stability of its day-to-day operations.

Answer 1

Option D. The firm takes actions to improve the stability of its day-to-day operations.

Step-by-step explanation:

The business risk of a company is comprised of financial and operational risks. The improvement of day to day stability of operations is related to reduction in the operational risk which is the correct option here.

Increasing fixed costs increases the business risk however changing the operations doesn't well describes whether they had reduced or increased the business risk. Furthermore, the shift in sales strategy is also not clear whether the contribution has been increased or not which is the sign of reduction in business risk. So the right option is option D.