Firms Whose Revenues Are Strongly Cyclical and Whose Operating Leverage

question 51

Multiple Choice

Firms whose revenues are strongly cyclical and whose operating leverage is high are likely to have:

• A)low betas.
• B)high betas.
• C)zero betas.
• D)negative betas.
• E)None of the above.

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Definitions:

Consumption

Families making use of goods and services.

Conspicuous Consumption

A term coined by Thorstein Veblen, referring to the spending of money on luxury goods and services to publicly display economic power—the consumption for the sake of prestige or status rather than utility.

Reputability

Refers to the quality or state of being reputable, widely respected, and honored by others, often used in the context of individuals, organizations, or businesses.

Leisure

Time spent away from work and essential domestic activities, typically used for relaxation, recreation, or personal interests.