If a Firm Has Current Earnings Per Share of $2

question 148

Multiple Choice

If a firm has current earnings per share of $2 and a degree of combined leverage of 4, a 10% increase in sales would result in earnings per share of:

• A)$2.80
• B)$8
• C)$2.20
• D)cannot tell from this information

---

Definitions:

Rate Of Inflation

The increase speed of overall service and product prices, which in turn, lowers the capacity to make purchases.

Probability Range

This term describes the spread within which a particular event is expected to occur, expressed in terms of probability.

Loss Chance

The probability or likelihood that an investment will yield a return lower than the original investment.

Capital Gains

The profit from the sale of an asset or investment, where the sale price exceeds the purchase price.