Which One of the Following Will Best Reduce the Risk

question 85

Multiple Choice

Which one of the following will best reduce the risk of a project by lowering the degree of operating leverage?

• A)hiring temporary workers from an employment agency rather than hiring part-time production employees
• B)subcontracting portions of the project rather than purchasing new equipment to do all the work in-house
• C)leasing equipment on a long-term basis rather than buying equipment
• D)lowering the projected selling price per unit
• E)changing the proposed labor-intensive production method to a more capital intensive method

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Definitions:

Available-for-Sale Securities

Financial assets that are neither held for trading purposes nor intended to be held to maturity, which can be sold in response to liquidity needs.

Held-to-Maturity Securities

Financial assets that the holder has the positive intent and ability to hold until a specified maturity date.

Debt Securities

Financial instruments that signify amounts owed by the issuer to the holder and include terms regarding repayments and interest rates.

Trading Securities

Financial assets bought and held primarily for sale in the short term to generate income on short-term price differences.