High Business & Financial Risk in Industry
Companies then manage total risk by balancing the two. A low risk businesslike
a bank, can take a lot of financial risk. Banks are often financed with up to
92% debt. Deposits are amounts owed by the bank and therefore a form of debt.
Up until the financial crisis, only a handful of banks had failed in the
previous 12 months. On the other hand young high tech companies know that they
have high business risk. These firms fail all the time. Therefore they finance
with little or no debt.
What industry has both high business risk and high financial risk?
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