If a High Percentage of a Firm's Operating Costs Are

question 37

Multiple Choice

If a high percentage of a firm's operating costs are fixed and hence do not decline when demand falls off, this will _____.

• A) decrease financial leverage
• B) optimize the capital structure of the firm
• C) increase the business risk of the firm
• D) decrease the firm-specific risk of the firm
• E) intensify the risk borne by thefirm's common stockholders

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