What Percentage Change in Sales Occurs If Profits Increase by 3

question 41

Multiple Choice

What percentage change in sales occurs if profits increase by 3 percent when the firm's degree of operating leverage is 4.5?

• A)0.33 percent
• B)0.67 percent
• C)1.5 percent
• D)3.33 percent

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Definitions:

Insider Trading

The illegal or legal trading of a public company's stock or other securities by individuals with access to nonpublic information about the company.

Public Announcement

A statement or declaration made to the general public, often by a company or government entity, regarding important information.

Merger

The combination of two or more companies into a single entity, typically involving the absorption of one by the other.

Securities Act of 1933

A United States federal law enacted as a result of the stock market crash of 1929, requiring that securities sold in the United States be registered and that investors receive significant information about securities being offered.