If a firms fixed costs rise relative to varible costs

Assignment Help Financial Management
Reference no: EM131023220

If a firms fixed costs rise relative to varible costs, __ and __.

a. operating leverage; risk increase

b. operating leverage; financial leverage increase

c. financial leverage; risk increase

d. operating leverage increases, financial risk decreases

Reference no: EM131023220

Questions Cloud

More intertwined with organizational strategy : Describe how purchasing strategy is becoming more intertwined with organizational strategy. How has this evolved and how is it changing the role of purchasing managers? Describe the legal ramifications that are associated with the purchasing role. Wh..
Effect of the business cycle on the inflation rate : Briefly describe the effect of the business cycle on the inflation rate and the unemployment rate. Why might the unemployment rate continue to rise during the early stages of an expansion?
Explain the tvm application required as you proceed : Piedmont Enterprises currently pays a dividend (D0) of $1 per share. This dividend is expected to grow at a 20 percent per year rate for the next 2 years, after which it is expected to grow at 6 percent per year for the foreseeable future. If you req..
Find the linear equation using the square method : Resolve the following problems of regression and ANOVA. Please use the statistics program to resolve the problems below. Please explain your answers.
If a firms fixed costs rise relative to varible costs : If a firms fixed costs rise relative to varible costs, __ and __.
Federal government shifts from taxing : Savers are taxed on the nominal interest payments they receive rather than the real interest payments. Suppose the federal government shifts from taxing nominal interest payments to taxing only real interest payments.
Should terri ronsin go along with the general managers : Should Terri Ronsin go along with the general manager's request to reduce the direct labor-hours in the predetermined overhead rate computation to 420,000 direct labor-hour.
Dividend-growth model-growth in dividends will be constant. : The dividend-growth model may be applied only if it is assumed that the growth in dividends will be constant. As the price of stock rises, the probability a convertible bond will be called declines.
Raise in order to build your shipping terminal : Suppose your firm needs to raise $10.5 million to construct a new shipping terminal. As CFO, you plan to raise funds in the following manner: For a debt issue, 2.5% of the amount raised will be kept by the Investment Banker, as gross spread. How much..

Reviews

Write a Review

Financial Management Questions & Answers

  Use the time value of money

let’s assume the par value of a bond issued by X corporation is $1,000 with a coupon rate of 8% annually. If the current market interest is 5% and the bond matures in 2 years, what would be the bond price? In other words, if you are an investor and w..

  What nominal annual interest rate will you be earning

You agree to make 24 deposits of $500 at the beginning of each month into a bank account. At the end of the 24th month, you will have $13,200 in your account. If the bank compounds interest monthly, what nominal annual interest rate will you be earni..

  Firm has no internal equity available for investment at time

Valley Flights, Inc. has a capital structure made up of 40% debt and 60% equity and a tax rate of 30%. A new issue of $1,000 par bonds maturing in 20 years can be issued with a coupon of 9% at a price of $1,098.18 with no flotation costs. Flotation c..

  Define the importance of time value of money

Define the importance of time value of money including compounding (future value), discounting (present value) and annuities. Why do organization leaders need to understand these concepts?

  Discuss the option of dividend reinvestment plans

Calculate the total number of shares to be acquired by CFR based on Adcock's market value of R70 per share - Determine the exchange ratio based on market values for the proposed acquisition.

  Calculate the depreciation expense

You are given the following information for Gandolfino Pizza Co.: sales = $45,000; costs = $21,500; addition to retained earnings = $8,750; dividends paid = $1,000; interest expense = $5,500; tax rate = 35 percent. Calculate the depreciation expense...

  No equity and cost of debt after tax

Project A: 15,000 investment. Bank loan, 9% interest rate annual, monthly payments. Project B: 2,000 cash investment, plus 150 delivery, 650 installation. No required rate of return given, no equity. Cost of debt after tax 8%

  Question 1nbsp allen air lines must liquidate some

question 1nbsp allen air lines must liquidate some equipment that is being replaced. the equipment originally cost 12

  What is the efficient markets hypothesis

How can rational investors reduce their risk of investing in "stand alone" stocks? How does a stock portfolio reduce the risk of investments? What is a stock's beta? What is the Efficient Markets Hypothesis?

  What would be your total real return on the investment

You bought one of Bergen Manufacturing Co.’s 8.5 percent coupon bonds one year ago for $1,064. These bonds make annual payments and mature eleven years from now. Suppose you decide to sell your bonds today when the required return on the bonds is 6 p..

  Calculate the amount of net income reported

Grant, Inc. acquired 40% of South Company's common stock for $200,000 on January 1, 2014. In its 2014 cash flow statement, Grant, Inc. reported an operating cash inflow related to its investment in South Company of $6,800. Calculate the amount of net..

  About the cash conversion cycle

Primrose Corp has $19 million of sales, $2 million of inventories, $4 million of receivables, and $2 million of payables. Its cost of goods sold is 80% of sales, and it finances working capital with bank loans at an 6% rate. What is Primrose's cash c..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd