The Beta of a Firm Is More Likely to Be

question 60

Multiple Choice

The beta of a firm is more likely to be high under which two conditions?

• A)High cyclical business activity and high operating leverage
• B)High cyclical business activity and low operating leverage
• C)Low cyclical business activity and low financial leverage
• D)Low cyclical business activity and low operating leverage
• E)Low operating and financial leverage

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Definitions:

Pickup Truck

A light motor vehicle with an open-top rear cargo area (bed), typically used for transporting goods.

Negatively Correlated

Refers to two variables which move in opposite directions; when one variable increases, the other decreases, and vice versa.

Variables

Elements, features, or factors that are likely to vary or change and can be measured, controlled, or manipulated in experiments or models.

Opposite Directions

Refers to two lines or paths that diverge from each other, heading in completely different trajectories.