Description Term Answer Business risk A. The situation in which managers have different, and usually better information about their firm's past, current, and future conditions and prospects compared to outsiders, such as extemal investors, creditors, suppliers, and customers. B. The level of sales at which a firm's eamings per share (EPs) are the Asymmetric same, regardless of which of two alternative capital structures are compared operating leverage c. A firm's use of relatively high fixed, as opposed to variable, operating costs, such as capital-intensive productive processes instead of abor ntensive methods. Financial leverage D. The ability of a firm to borrow money at a reasonable cost when good investment opportunities arise because it currently less debt than that suggested by its optimal capital structure. Reserve borrowing E. The practice of employing a capital structure that contains a large capacity proportion of fixed-cost sources of financing, such as debt securities and preferred stock. F. The mix of debt, preferred stock, and common stock that minimizes a Signa firms weighted average cost of capital. Financial risk G. The level and nature of risk attributable to a firm's activities and operations, and ignoring the risks associated with the firms capital structure Eps indifference H. The combination of common equity, preferred stock, and debt capital point used to finance a firm's assets. optimal capital I. The risk to the firms shareholders resulting fram management's decision structure to employ fixed-cost financing sources in the firm's capital structure. Capital structure J. An action taken by a firm's management that provides clues to investors about how management views the firm's prospects