BAM 313 Introduction to Financial Management Unit Exam 4 (already graded)

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1. A high degree of variability in a firm's earnings before interest and taxes refers to: a) business risk b) financial leverage c) operating leverage d) financial risk 2. If a firm has no operat... ing leverage and no financial leverage, then a 10% increase in sales will have what effect on EPS? a) EPS will increase by 10% b) EPS will remain the same c) EPS will increase by less than 10% d) EPS will decrease by 10% 3. According to the moderate view of capital costs and financial leverage, as the use of debt financing increases: a) the cost of capital continuously increases b) there is an optimal level of debt financing c) the cost of capital remains constant d) the cost of capital continuously decreases [Show More]

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