If a Project Has a Higher Proportion of Fixed to Variable

question 13

Multiple Choice

If a project has a higher proportion of fixed to variable costs,holding the risk of its revenues constant:

• A)its beta will be lower,hence its cost of capital will be lower.
• B)its beta will be higher,hence its cost of capital will be higher.
• C)its beta will be unaffected,since beta does not measure the sensitivity of the project's cash flows to market risk.
• D)its financial leverage will be higher.

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Definitions:

Political Structures

The organizational frameworks and institutions through which societies govern and make decisions.

Economic Structures

The complex frameworks that define the economic organization, activities, and relationships within a society.

Kulturkampf

Literally "culture struggle," the conflict between the German imperial government and the Roman Catholic Church from about 1871 to 1887, over control of educational and ecclesiastical appointments.

Bismarck's Policy

The political strategies and foreign policies implemented by Otto von Bismarck, Chancellor of the German Empire, aimed at achieving German unification and maintaining European stability through diplomacy and the balance of power.