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Higher gearing increases the financial risk for a company. Which of the following increase with higher gearing, when borrowing is all in domestic currency? Risk 1 Greater volatility in earnings Risk 2 Greater credit risk Risk 3 Greater cash flow risk Risk 4 Greater interest rate risk A. Risks 2 and 4 only. B. Risks 1, 2 and 3 only. C. Risks 1 and 3 only. D. Risks 1, 2, 3 and 4. |