If a Given Change in Sales Results in a Larger

question 11

Multiple Choice

If a given change in sales results in a larger relative change in EPS then we can definitely say that the firm has

• A)a degree of financial leverage greater than one.
• B)a degree of operating leverage less than one.
• C)a degree of total leverage less than one.
• D)a degree of financial leverage less than one.
• E)a degree of total leverage greater than one.

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Definitions:

Option Quote

Information about the price of an option contract, including the bid and ask prices, last traded price, and contract specifics.

Market Price

The present cost at which a service or asset is available for purchase or sale.

Put Contract

A financial contract that gives the holder the right, but not the obligation, to sell a certain amount of an underlying asset at a specified price within a specific time period.

Stock Price

The cost of purchasing a share of a company, which fluctuates based on supply and demand, company performance, and market conditions.