Which of the Following Is the Most Important Factor That

question 96

Multiple Choice

Which of the following is the most important factor that affects a firm's financing mix?

• A)The amount of EPS
• B)The amount of operating income
• C)The number of shares that are outstanding
• D)The predictability of cash flows

---

Definitions:

Beta

The measure of the systematic risk of a security. The tendency of a security’s returns to respond to swings in the broad market.

Market Risk

Risk factors common to the whole economy; also called systematic or nondiversifiable risk.

Diversified Portfolio

An investment strategy that spreads investments among various financial instruments, industries, and other categories to minimize risk.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.