CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

If two companies have identical operating risk, they also have identical ______.
A. business risk
B. sensitivity of operating earnings to changes in the number of units produced and sold
C. total leverage

User Contributed Comments 3

User Comment
jackwez Why not A?
janecb1 Business Risk determined by both sales risk and operating leverage.
gordonp87 janecb1, that is not correct. B is correct, but so is A. Business risk is the risk of the firm's assets when no debt is used. Operating risk is exactly the same thing. I think this question meant to say "if two companies have identical OPERATIONAL risk." Operational risk is not quite the same thing.
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