Industry analysts have predicted a sharp decline in housing demand in the months ahead. After learning of this prediction, Nest Home

Builders opts to convert as many of its variable costs to fixed costs as possible. This decision

is a poor one, because it will increase the firm's degree of operating leverage and thus increase the firm's degree of risk.

is a poor one, because it will decrease the firm's degree of operating leverage and thus increase the firm's degree of risk.

is a wise one, because it will decrease the firm's degree of operating leverage and thus reduce the firm's degree of risk.

is a wise one, because it will increase the firm's degree of operating leverage and thus reduce the firm's degree of risk.