The Use of Fixed-Cost Financing Is Referred to As

question 193

Multiple Choice

The use of fixed-cost financing is referred to as:

• A)operating leverage.
• B)a leveraged buyout.
• C)financial leverage.
• D)combined leverage.

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Definitions:

Call

An option contract giving the owner the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.

Strategy

A plan of action designed to achieve a long-term or overall aim.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, serving as a baseline for assessing the risk and return on other investments.

Stock Option

A derivative financial instrument that gives the holder the right to buy or sell a stock at a specified price before a certain date.