Which of the Following Statements Is Correct

question 20

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 form 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 ratio which is lower than the one that maximizes expected EPS.
• E)The above statements are all false.

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Definitions:

Level of Education

Refers to the highest degree or stage of formal learning that an individual has completed.

Significant Change

A statistically determined change in data or results that is unlikely to have occurred by chance alone, indicating a meaningful difference or effect.

Proportions

A comparison of a part of a whole in terms of a simple ratio or fraction, often expressed as a percentage.

Business Majors

Students or professionals focusing on business administration or management studies, including subjects like finance, marketing, and entrepreneurship.