External factors such as expiration of basic patents and industry competition effect____________?
Correct answer: C. Company's beta
- A. Patents premium
- B. Competition premium
- C. Company's beta
- D. Expiry premium
Explanation
Patent expiry and increased industry competition can change a firm's systematic risk by affecting its sensitivity to economic and industry-wide conditions. In CAPM terms, these changes can affect the company's beta.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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