If a Firm's Degree of Total Leverage (DTL)is 8

question 64

Multiple Choice

If a firm's degree of total leverage (DTL) is 8.0,which of the following must be correct?

• A) The firm must have fixed operating costs.
• B) The firm must have fixed financial costs.
• C) The firm must have both fixed operating costs and fixed financial costs.
• D) The firm must have some fixed costs,but not enough information is given to determine whether the fixed costs are operating,financial,or both.
• E) With the information given,we cannot tell whether the firm has any fixed costs (either operating or financial)at all.

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Definitions:

Based On Power

Characterized by or dependent upon the distribution and exercise of power, authority, or influence within a group, organization, or society.

Power

Is the capacity to carry out one’s own will despite resistance.

Despite Resistance

Occurring in the face of opposition or efforts to prevent or discourage it.

Ability To Get

The capacity or means to acquire or obtain something, often referring to resources, information, or skills.