1.4. What do firms wish to determine when using break-even analysis ? A. The extent of leverage in their capital structures B. Their level of operations necessary to cover all cost C. Their profitability 1.5. The most common statistical indicator of an asset's risk is known as the A. probability distribution. B. expected value of the return. C. standard deviation. 1.6. Which attitude towards risk best explains a risk-averse investor? A. An increase in risk will be compensated for by an expected increase in return. B. A higher return will not justify the increase in risk. C. No change in return would be required for an increase in risk. 1.7. What expense does a company incur as a consequence of its financing activities? A. Depreciation expense B. Interest expense C. Income tax expense