The Degree of Operating Leverage Will Increase If a Firm

question 144

True/False

The degree of operating leverage will increase if a firm decides to compensate its sales representatives with a fixed salary and bonus rather than with a pure percent-of-sales commission.

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Definitions:

Conversion

The act of changing one form of securities into another, such as converting bonds into shares of stock, or the process of changing one currency into another.

Trading Securities

Financial securities that are purchased and held primarily for sale in the near term to generate income on short-term price differences.

Unrealized Holding

A profit or loss that arises from the change in value of an investment that has not yet been sold or realized.