Statement 1: The relationship between operating leverage and financial leverage is always multiplicative Statement 2: If the firm has zero debt, the firm is said to have no risk at all Both statements are true Both statements are false Only statement 2 is true Only statement 1 is true

Statement 1: The relationship between operating leverage and financial leverage is always multiplicative Statement 2: If the firm has zero debt, the firm is said to have no risk at all Both statements are true Both statements are false Only statement 2 is true Only statement 1 is true

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Statement 1: The relationship between operating leverage and financial leverage is always multiplicative

Statement 2: If the firm has zero debt, the firm is said to have no risk at all

Both statements are true

Both statements are false

Only statement 2 is true

Only statement 1 is true

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