Question: (Business and financial risk) Which of the following sources of new earnings volatility represents the effect of business versus financial risk (discuss the rationale for your decisions):
a. Pajala AB in Sweden is considering implementation of an ambitious life-long education program that would be offered to all employees, and is willing to borrow 50 percent of the money needed to fund the project.
b. Schenker Trans has historically acquired its own trucks, and has recently signed an agreement with a local transportation company to outsource part of its short-distance deliveries.
c. Lidl has been a low-cost grocery shop that sells basic products. The firm recently decided to purchase a local bakery nearby, in order to sell freshly made bread.