CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

Which of the following affects a firm's business risk?

I. The degree of operating leverage
II. The risk of adjusting sales prices
III. The level of uncertainty about future sales
A. II and III
B. I, II and III
C. I and III
Explanation: Business risk depends on: (1) unit sales variability, (2) sales price variability, (3) input price variability, (4) ability to adjust output prices for changes in input prices, and (5) the extent to which costs are fixed (operating leverage).

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