Financial Leverage Is The

question 70

Multiple Choice

Financial leverage is the:

• A)presence of fixed operating costs.
• B)portion of earnings that is paid out as dividends to the common stockholders.
• C)risk associated with a firm's operations.
• D)combination of the debt and the equity a firm uses to finance its assets.
• E)extent to which fixed-income securities are used in a firm's capital structure.

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Definitions:

Variable Input

Inputs or resources whose quantity can be changed in the short term to adjust the level of production, such as labor or raw materials.

Labor Market

The marketplace in which employers find workers and workers find jobs, characterized by the demand and supply of labor.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production, holding other factors constant.

Worker

An individual employed to perform tasks or services in exchange for compensation, such as wages or salaries.