One Factor That Can Affect the Market Risk of a Project

question 50

Multiple Choice

One factor that can affect the market risk of a project is its degree of operating leverage,which is:

• A)the relative proportion of operating assets versus non-operating assets.
• B)the relative proportion of operating assets versus equity.
• C)the relative proportion of operating expenses versus non-operating expenses.
• D)the relative proportion of fixed versus variable costs.

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Definitions:

Investing

The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Compounded Annually

The process where interest earned in one period is added to the principal sum and then interest in the next period is calculated on the new total.

Ordinary Annuity

A series of equal payments made at regular intervals, such as monthly or annually, with the payments occurring at the end of each period.

Investment Account

A financial account held by an investment dealer that enables individuals to purchase securities such as stocks, bonds, and mutual funds.