Expert Analysts Resources (EAR) Has Provided You with the Following

question 41

Multiple Choice

Expert Analysts Resources (EAR) has provided you with the following information about three companies you are currently evaluating: $\begin{array}{lcc}&\text { Degree of Operating}&\text { Degree of Financial}\\\underline{\text { Company } }&\underline{ \text { Leverage (DOL) } }& \underline{\text { Leverage (DFL) }}\\\text { Acme } & 1.5 \times & 6.0 \times \\\text { Apex } & 3.0 \times & 4.0 \times \\\text { Alps } & 5.0 \times & 2.0 \times\end{array}$

According to this information, which firm would be considered riskiest?

• A)Acme, because its DFL equals 6.0, which is the highest leverage associated with any of the three firms.
• B)Acme, because its degree of total leverage (DTL) is almost equal to 10×.
• C)Apex, because it has the highest degree of total (DTL).
• D)Alps, because it has the highest DOL.
• E)Acme, because is has the lowest DOL.

---

Definitions:

Interneurons

Nerve cells within the central nervous system that connect sensory and motor neurons, playing a critical role in reflexes and neuronal circuits.

Axons

Long, threadlike parts of nerve cells which transmit electrical impulses away from the neuron's cell body.

Thousandths

A fractional value in mathematics, symbolized by 0.001, representing one part in a thousand.

Basic Types

Fundamental categories or groups into which entities, concepts, or items are classified based on shared characteristics or attributes.