If a Company Has a Degree of Operating Leverage of 3.0

question 54

Multiple Choice

If a company has a degree of operating leverage of 3.0 and sales increase by 25%, then:

• A)total variable costs will increase by 75%
• B)total variable costs will not change
• C)profit will increase by 30%
• D)profit will increase by 75%

Calculate and interpret the Sharpe Ratio and understand its relevance in risk-adjusted performance measurement.

Explain the role of standard deviation in assessing risk and its limitations in distributions with skewness or kurtosis.

Understand the concept of skewness and its impact on risk assessment.

Identify the most common and effective measures of risk for negative returns.

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Definitions:

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