Which of the following statements about Operating Leverage and Risk from the lecture are TRUE:

1. Someone with relatively high fixed costs and low variable costs will have a high level of operating leverage and a low risk of making a large loss if their income falls.
2. Someone with relatively low fixed costs and high variable costs will have a low level of operating leverage and a high risk of making a large loss if their income falls.

Question 10Answer

Neither of the statements are true (both are false)

Only statement 1 is true

Only statement 2 is true

Both statements are true (neither are false)

Clear my choice