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

• A) II only
• B) I and II only
• C) I and III only
• D) I, II, and III

---

Definitions:

Orders to Pay

Instructions typically issued by a debtor authorizing their bank to pay a specified amount of money to a creditor on a certain date.

Certificate of Deposit

A Certificate of Deposit is a financial product offered by banks that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

Bank

A financial institution licensed to receive deposits, offer loans, and provide various financial services to its customers.

Check

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer.