Which of the Following Statements Is CORRECT? as a Firm

question 26

Multiple Choice

Which of the following statements is CORRECT? As a firm increases the operating leverage used to produce a given quantity of output, this will

• A) normally lead to a decrease in its business risk.
• B) normally lead to a decrease in the standard deviation of its expected EBIT.
• C) normally lead to a decrease in the variability of its expected EPS.
• D) normally lead to a reduction in its fixed assets turnover ratio.
• E) normally lead to an increase in its fixed assets turnover ratio.

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Definitions:

Andrew Johnson

The 17th President of the United States who served from 1865 to 1869, following the assassination of Abraham Lincoln.

Wade-Davis Bill

A 1864 proposal for the Reconstruction of the South that required a majority of prewar voters to swear allegiance to the Union.

Reconstruction Act

Legislation passed in 1867 that outlined the conditions for the Southern States to be readmitted to the Union after the Civil War, including requirements for suffrage for black males.

Ex-Confederate State

A state that was part of the Confederacy during the American Civil War, fighting to preserve slavery and secession from the Union.