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Which of the Following Affects a Firm's Sensitivity of Its

question 50

Multiple Choice

Which of the following affects a firm's sensitivity of its earnings to the business cycle?
I. Financial leverage
II. Operating leverage
III. Type of product


Definitions:

Implied Warranty

A legal concept that guarantees a product will meet certain standards of quality and reliability without explicitly stating them in a contract.

Merchantability

A warranty that a product will meet reasonable expectations of quality and functionality at the time of sale.

Ordinary Purposes

Refers to the general, expected use of a product or service, implying that it meets a basic level of functionality and safety.

Perfect Tender Rule

This rule mandates that goods delivered under a sales or lease contract must exactly meet the terms of the contract, with any deviation allowing the buyer to reject the products.

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