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DeGiaimo Co

question 129

True/False

DeGiaimo Co.has an operating leverage of 5.If next year's sales are expected to increase by 10%, then the company's operating income will increase by 50%.


Definitions:

Common Stock

Equity without priority for dividends or in bankruptcy.

Call Option

A financial contract giving the buyer the right, but not the obligation, to buy an asset at a predetermined price within a specific time frame.

Exercise Price

The rate at which a call option allows buying or a put option allows selling of the underlying financial instrument or commodity.

Put Option

A contractual agreement allowing the possessor the choice, not the duty, to dispose of a particular volume of an underlying asset at an agreed-upon rate before a certain deadline.

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