Question: Question 1. (3 marks) Explain what is meant by operating and financial risk. Suppose that firm A has a greater operating risk than firm B.

Question 1. (3 marks) Explain what is meant by operating and

Question 1. (3 marks) Explain what is meant by operating and financial risk. Suppose that firm A has a greater operating risk than firm B. Is it true that firm A also has a higher cost of equity? Question 2. (3 marks) Why is the use of debt referred to as financial leverage

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