Expert Analysts Resources (EAR) Has Provided You with the Following

question 47

Multiple Choice

Expert Analysts Resources (EAR) has provided you with the following information about three companies you are currently evaluating:
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C $\begin{array} { l c c } \text { Company } & \text { Degree of Operating Leverage (DOL) } & \text { Degree of Financial Leverage (DFL) } \\\hline\text { Acme } & 1.5 \times & 6.0 \times \\\text { Apex } & 3.0 \times & 4.0 \times \\\text { Alps } & 5.0 \times & 2.0 \times\end{array}$
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Based on this information, which firm is regarded as having the greatest overall risk?

• A)Acme, because it has the highest degree of financial leverage (DFL).
• B)Acme, because has the highest degree of total leverage (DTL).
• C)Apex, because it has the highest degree of total leverage (DTL).
• D)Alps, because it has the highest degree of operating leverage (DOL).
• E)Acme, because it has the lowest degree of operating leverage (DOL).

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Definitions:

Free Rider

An individual who benefits from the goods, services, or advantages provided by a group without contributing to the cost or effort involved.

Agency Shop Agreements

Labor agreements that require employees to either join the union or pay a fee equivalent to union dues, even if they choose not to become union members.

Fair Representation

The legal duty of a union to represent all members impartially and effectively, especially in negotiations and grievance processes.

Superseniority

A privilege given to union officials that provides them higher priority over other workers in matters of layoffs and recalls, ensuring their positions are more secure.