Question
14. Business risk is the result of all of the following EXCEPT A.a firms use of debt in its capital structure. B.product diversification. C.a firms
14. Business risk is the result of all of the following EXCEPT
A.a firms use of debt in its capital structure.
B.product diversification.
C.a firms growth prospects.
D.degree of competition.
12.Under which of the following conditions would the usage of fixed costs in the operation of a business be most beneficial?
A.When a business is expected to experience a period of declining sales.
B.When a business is expanding, and sales revenues are rising.
C.During an economic recession.
D.When interest rates are rising.
9.A firm is considering three different financing alternatives, debt, preferred stock, and common equity. The firm has created an EBIT-EPS chart that shows several indifference points. What does each indifference point show the firm?
A.The level of EBIT that generates identical EPS under two alternative financing plans.
B.It shows the level of EBIT and EPS at which DFL is identical under two alternative financing plans.
C.Total firm risk equals business risk times financial risk.
D.The level of sales that generates identical EBIT and EPS figures.
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