Suppose a Firm Increases the Operating Leverage Used to Produce

question 62

Multiple Choice

Suppose a firm increases the operating leverage used to produce a given quantity of output.What will this normally lead to?

• A)a decrease in the standard deviation of its expected EBIT
• B)a decrease in its business risk
• C)a decrease in the variability of its expected EPS
• D)a reduction in its fixed assets turnover ratio

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Definitions:

Self-Evaluation Maintenance

A psychological process where individuals adjust their perception of themselves based on their relationship and comparisons to others.

Relevance

The degree to which something is related or useful to the matter at hand, impacting how information or actions are perceived and valued.

Closeness

Refers to the emotional proximity or bonding between individuals.

Self-Control

The capacity of a person to control their feelings, ideas, and actions when confronted with desires and sudden urges.