A Firm Will Likely Benefit Most from Diversifying If

question 17

Multiple Choice

A firm will likely benefit most from diversifying if:

• A) the correlations between country economies are high.
• B) the correlations between country economies are low.
• C) the variability of all country economy levels is high.
• D) B and C

Understand the basic principles of cost-volume-profit (CVP) analysis and its limitations.

Calculate and interpret the break-even point in units and dollars.

Apply sensitivity analysis to assess changes in profit related to variations in selling prices, costs, and volume.

Determine operating leverage and its impact on profits.

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Definitions:

Similarity

The state or fact of being alike or having common features, often used to describe how objects, ideas, or individuals share common characteristics.

Reciprocity

A social norm dictating that people should return the help or kindness they receive from others.

Communicator

A person or device that transmits or exchanges information.

Audience

A group of individuals who gather to watch, listen to, or read a performance, presentation, or work of art.