________ Is a Term Used to Describe the Magnification of Risk

question 66

Multiple Choice

________ is a term used to describe the magnification of risk and return introduced through the use of fixed-cost financing, such as preferred stock and debt.

• A) Financial leverage
• B) Operating leverage
• C) Fixed-payment coverage
• D) Benchmarking

---

Definitions:

Analyze

To examine something in detail in order to understand it better or discover more about it.

Interpret

The act of explaining, defining, or understanding something within a specific context, often applied to translating languages, analyzing data, or understanding behavior.

Conceptual Skills

Abilities to understand complex ideas and the interrelationships between them, allowing for effective problem-solving and strategic planning at a high level.

Long-term Plans

Strategic goals that an organization aims to achieve over an extended period, typically over several years, to ensure growth and sustainability.