Suppose a Firm Increases the Operating Leverage Used to Produce

question 69

Multiple Choice

Suppose a firm increases the operating leverage used to produce a given quantity of output, what will it normally lead to?

• A) a decrease in the standard deviation of its expected EBIT
• B) a decrease in its business risk
• C) a decrease in the variability of its expected EPS
• D) a reduction in its fixed assets turnover ratio

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Placebo

A substance with no therapeutic effect, often used as a control in testing new drugs.

Treatment

In a research context, an intervention or condition that participants in an experimental group are exposed to, to observe its effects.

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