Which of the Following Statements Is Correct

question 115

Multiple Choice

Which of the following statements is correct?

• A) When financial leverage is used,the graphical probability distribution of net income would tend to be more peaked than a distribution where no leverage is present,other things held constant.
• B) From an operational standpoint the goal of maintaining financial flexibility translates into maintaining adequate reserve borrowing capacity.
• C) While business risk varies from one industry to another and can change over time,it affects all firms equally within a particular industry.
• D) The optimal capital structure is the one that maximizes EBIT,and this always calls for a debt-to-assets ratio which is lower than the one that maximizes expected EPS.
• E) The above statements are all false.

---

Definitions:

Somatic Symptom Disorders

A category of mental disorders characterized by excessive thoughts, feelings, or behaviors related to physical symptoms, leading to significant distress or impairment.

Factitious Disorders

A mental disorder in which a person acts as if they have a physical or mental illness when they are not really sick, often done to gain attention or sympathy.

Psychological Stress

A form of stress experienced as a result of perceived pressures, conflicts, and demands that challenge an individual’s ability to cope, potentially affecting mental health.

Voluntary Control

The ability to consciously regulate one's own thoughts, feelings, or actions.