The beta of a firm is likely to be high under what two conditions? High cyclical

Question

The beta of a firm is likely to be high under what two conditions?

High cyclical business activity and low financial leverage.

low cyclical business activity and high financial leverage.

Low cyclical business activity and low financial leverage.

High cyclical business activity and high financial leverage.

None of the above.

High cyclical business activity and low financial leverage.

low cyclical business activity and high financial leverage.

Low cyclical business activity and low financial leverage.

High cyclical business activity and high financial leverage.

None of the above.

Explanation / Answer

Beta is measure of unsystematic risk. The combination of High cyclical business activity and high operating leverage. Thus ans

E) None of the above

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