An Increase in Fixed Operating Costs Will Result in ________

question 207

Multiple Choice

An increase in fixed operating costs will result in ________.

• A) a decrease in the degree of operating leverage
• B) an increase in the degree of operating leverage
• C) a decrease in the degree of financial leverage
• D) an increase in the degree of financial leverage

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Definitions:

Indenture

A formal legal agreement, contract, or document, especially one outlining the terms of a bond or other financial debt instrument.

Debenture

A type of debt instrument that is not secured by physical assets or collateral.

Unsecured Bond

A bond that does not have specific assets as collateral, making it riskier than secured bonds, thereby relying on the issuer's creditworthiness.

Par Value

A nominal value of a security or stock set by the issuing company, which may not reflect its market value.