The More Fixed Cost Financing a Firm Has in Its

question 67

True/False

The more fixed cost financing a firm has in its capital structure, the greater its financial leverage and risk.

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Definitions:

M1

A category of the money supply that includes all physical money like coins and currency, as well as checkable deposits and traveler's checks.

M2

A gauge of currency circulation that covers physical money, funds in checking accounts, and assets easily turned into cash.

FDIC

The Federal Deposit Insurance Corporation, a U.S. government agency that insures deposits at banks and thrifts to maintain public confidence and encourage stability in the financial system.

Time Deposits

Bank deposits that cannot be withdrawn for a certain term or period of time without incurring a penalty.