Which One of the Following Statements Is Correct in Relation

Multiple Choice

Which one of the following statements is correct in relation to a firm's short-run financial risk?

A) Short-run financial risk results from permanent changes in prices due to new technology.
B) A financially sound firm can become financially distressed as the result of its short-run exposure to financial risk.
C) Each segment of a business should be responsible for hedging its own short-run financial risk.
D) Short-run financial risk is defined as temporary price changes which result directly from natural disasters, such as tornadoes, droughts, and floods.
E) Thus far, hedging techniques have been unsuccessful in reducing short-run financial risk.