Which of the Following Statements Is Most Correct

question 74

Multiple Choice

Which of the following statements is most correct?

• A)Increasing financial leverage is one way to increase a firm's basic earning power (BEP).
• B)Firms with lower fixed costs tend to have greater operating leverage.
• C)The debt ratio which maximizes EPS generally exceeds the debt ratio which maximizes share price.
• D)Both a and b are correct.
• E)Both a and c are correct.

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Definitions:

Insurable Risks

Risks that meet certain criteria making them insurable, such as being definite, accidental, and potentially financially devastating to the insured.

Entrepreneur's Reward

The financial gain and intangible benefits an entrepreneur receives for taking on the risks and challenges of starting and managing a new business venture.

Profits And Losses

Financial results indicating the difference between a business's revenues and its costs over a period; profits indicate revenues exceed costs, whereas losses indicate the opposite.

Scarce Resources

Natural, human, and manufactured assets available in limited quantities that are used for the production of goods and services.