Which of the following is true of the degree of financial leverage of a firm?
A. The degree of financial leverage affects the earnings before interest and taxes of the firm.
B. The degree of financial leverage is defined as the percentage change in net operating income with a given percentage change in sales.
C. A lower degree of financial leverage suggests that higher risk is associated with the firm's normal operating activities.
D. The degree of financial leverage affects the operating section of the income statement.
E. A higher degree of financial leverage suggests that higher risk is associated with the firm's mix of debt and equity financing.
Answer: E
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a. a gambling addiction b. lack of segregation of duties c. centralized decision making environment d. questionable integrity of employees
Which of the following would be considered an advantage of operating one’s own business?
a. long hours b. increased family time c. risk d. irregular income e. personal gratification
Why is an investor concerned with how the investment characteristics of a market-cap-weighted bond index can change over time?
What will be an ideal response?
CircusesAs recently as twenty years ago circuses came to town with tents, animals, clowns, and other performers. An advance man arrived about two weeks before the circus actually arrived, covered the community with posters, and gave out free tickets to schoolchildren. If the advance man had done a good job, when the circus arrived and opened its tent doors, three hundred to six hundred people would fill its seats. When the largest circus organizations merged, the newly formed Ringling Bros. and Barnum & Bailey's Greatest Show on Earth began performing in 4,000-seat arenas. Attendance, however, has stagnated in recent years. People have stopped going to the circus because they miss the circus tent and the close intimate atmosphere it created. The newest thing in circuses is a return to the
tent atmosphere with an emphasis on the types of entertainment that were popular years ago. Antique circus wagons, calliope music, and cotton candy are replacing the exotic animals and the prima donna performers. To satisfy the needs of this new audience, the tent circus now sells lattes and wine.Refer to Circuses. To exhibit a societal marketing orientation, circuses could: A. rely on publicity and avoid any promotions B. empower their employees to satisfy customer wants C. donate a percentage of their profits to local educational institutions D. use relationship marketing E. emphasize customer value