Author Question: Which of the following statements about combined (operating & financial) leverage is true? A) ... (Read 75 times)

mwit1967

  • Hero Member
  • *****
  • Posts: 501
Which of the following statements about combined (operating & financial) leverage is true?
 
  A) Usage of both operating and financial leverage reduces a firm's risk.
  B) If a firm employs both operating and financial leverage, any percent change in sales will
  produce a larger percent change in earnings per share.
  C) A firm that is in a capital-intensive industry should use a higher level of financial leverage
  than a firm that employs low levels of operating leverage.
  D) High operating leverage and high financial leverage offset one another, meaning that if sales
  increase by 10, then EPS will also increase by 10.

Question 2

A British-made component costs 36 U.K. pounds. A company in the United States needs to buy
  these components and the current indirect quote indicates that one dollar will buy .6250 pounds.
 
  Ignoring transactions costs, how much will one component cost in U.S. dollars?
  A) 72.00 B) 22.50 C) 45.94 D) 57.60


Sassygurl126

  • Sr. Member
  • ****
  • Posts: 320
Answer to Question 1

B

Answer to Question 2

D



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Of the estimated 2 million heroin users in the United States, 600,000–800,000 are considered hardcore addicts. Heroin addiction is considered to be one of the hardest addictions to recover from.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

Did you know?

For about 100 years, scientists thought that peptic ulcers were caused by stress, spicy food, and alcohol. Later, researchers added stomach acid to the list of causes and began treating ulcers with antacids. Now it is known that peptic ulcers are predominantly caused by Helicobacter pylori, a spiral-shaped bacterium that normally exist in the stomach.

Did you know?

Oxytocin is recommended only for pregnancies that have a medical reason for inducing labor (such as eclampsia) and is not recommended for elective procedures or for making the birthing process more convenient.

Did you know?

There are 20 feet of blood vessels in each square inch of human skin.

For a complete list of videos, visit our video library