Concering diversifiable risks

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Reference no: EM13943681

1) LDI can produce 63,000 parts per year. At this level, the degree of operating leverage is 2.85. Fixed costs are $140,000 annually. What is the operating cash flow at this level?

2) Concering diversifiable risks, which of the following statements is true? Answer from a-e below.

I. Diversifiable risks can be essentially eliminated by investing in the market portfolio.

II. The market rewards investors for diversifiable risk by paying a risk premium.

III. Diversifiale risks are generally associated with an individual firm or industry.

IV. Beta measures diversifiable risk.

a. I and III only.

b. II and IV only.

c. I and IV only.

d. II and III only.

e. I, II, and III only.

Reference no: EM13943681

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