The correct answer is: B. financial risk
Financial leverage is a measure of a company’s ability to finance its assets with debt. A high level of financial leverage indicates that a company is using a lot of debt to finance its assets. This can be risky, as it means that the company is more likely to go bankrupt if its profits decline.
Business risk is the risk that a company’s profits will decline due to factors such as changes in the economy, changes in consumer demand, or changes in the competitive landscape. Financial risk is the risk that a company will go bankrupt due to its inability to repay its debt.
Production risk is the risk that a company will not be able to produce its products or services due to factors such as equipment failure, labor strikes, or natural disasters.
Financial leverage helps one to estimate financial risk because it measures the amount of debt that a company is using to finance its assets. A high level of financial leverage indicates that a company is more likely to go bankrupt if its profits decline.