Which of the Following Statements Is CORRECT

question 9

Multiple Choice

Which of the following statements is CORRECT?

• A)An increase in fixed costs, (holding sales and variable costs constant) will reduce the company's degree of operating leverage.
• B)An increase in interest expense will reduce the company's degree of financial leverage.
• C)If the company has no debt outstanding, then its degree of total leverage equals its degree of operating leverage.
• D)If a firm's degree of operating leverage increases, its degree of financial leverage must also have increased.
• E)If the company has no debt outstanding, then its degree of total leverage equals its degree of financial leverage.

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Definitions:

Separation of Powers

A constitutional principle dividing the responsibilities of government among different branches (typically executive, legislative, and judicial) to prevent the concentration of power and provide checks and balances.

Checks and Balances

A system within a government that ensures no single branch becomes too powerful by providing each branch the authority to limit the powers of the others.

Republicanism

A political ideology that values the principles of a republic, emphasizing civic virtue, liberty, and resistance to corruption and monarchy.

Common Sense

Practical judgment concerning everyday matters, or a basic ability to perceive, understand, and judge in a manner that is shared by (common to) nearly all people.