Corporate Finance Q113

113Alpha and Beta both operate in the automobile sector with the same degree of operating leverage. Alpha has a capital structure of 40% debt and 60% equity, while Beta is financed completely by equity. Which of the following statements is most accurate? Compared to Beta, Alpha has:

Option : A
Explanation : Alpha’s degree of operating leverage is the same as Beta’s, whereas Alpha’s degree of total leverage and degree of financial leverage are higher.

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