Which of the Following Is True of Leverage

question 36

Multiple Choice

Which of the following is true of leverage?

• A) It refers to the effects that operating and financial fixed costs have on the returns that shareholders earn.
• B) It is associated with risks which are out of the control of managers.
• C) It includes the effect of operating fixed costs on the returns of shareholders and not the financial fixed costs.
• D) It is used to evaluate the profitability associated with various levels of sales.

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Definitions:

Conditioned Stimulus

A once-neutral cue that, after being paired with an unconditioned stimulus, eventually induces a conditioned response.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without any need for learning.

Unconditioned Response

An automatic, natural reaction to a stimulus that occurs without previous conditioning.

Conditioned Response

The learned response to a previously neutral stimulus that has become conditioned through association with an unconditioned stimulus in classical conditioning.