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1. Which of the following does NOT affect the business risk of a firm? Variability in Sales (Price and/or Volume) Degree of Operating Leverage Product

1. Which of the following does NOT affect the business risk of a firm?

Variability in Sales (Price and/or Volume)

Degree of Operating Leverage

Product Diversification

Level of Debt

2. According to the tradeoff model of capital structure, which is true at the optimal capital structure?

The firm

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