If a Firm Increases the Proportions of Debt and Preferred

question 55

Multiple Choice

If a firm increases the proportions of debt and preferred stock that are contained in its capital structure, its _____. 

• A)financial risk will increase
• B)business risk will decrease
• C)tax liability will increase
• D)operating leverage will decrease
• E)financial leverage will decrease

Understand the Central Limit Theorem and its significance in relation to non-normal distributions.

Calculate population size using the finite population correction factor.

Utilize the formula of the standard error of the mean to calculate probabilities related to sample means from infinite populations.

Describe the properties of the sampling distribution of the sample mean.

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Definitions:

Interest Rate

The cost of borrowing money or the return on savings, expressed as a percentage of the principal.

Annual Interest Rate

The percentage of the principal that is paid as a fee over a period of one year for borrowing or saving money.

Capital Income

This term refers to the total amount of money generated from investments, dividends, interest, and any other sources other than labor earnings.

Rent

A regular payment made for the use of land, property, or equipment.