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List the determinants (factors that cause) of business risk. Should managers of companies that have high levels of business risk increase operating leverage? Why or

  1. List the determinants (factors that cause) of business risk.
  2. Should managers of companies that have high levels of business risk increase operating leverage? Why or why not?
  3. What is financial risk? Its not the same as business risk.
  4. Explain what asymmetric information means and what a new stock issue tends to signal.
  5. How does the tax deductibility of interest affect the optimal target capital structure?

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