1. Which of the following is not true with respect to operating leverage?
a. Increased operating leverage increases business risk.
b. Virtually all firms have at least some operating leverage.
c. Firms with higher operating leverage have a larger contribution from each sale, so they accumulate profits or losses faster as they move away from the breakeven point in sales.
d. Higher operating leverage insulates a firm from losses in bad times.
2. A U.S Treasury bill with 182 days to maturity is priced at $985 (face value=$1,000). It's yield is closet to:
A. 1 Percent
B. 2 Percent
C. 3 Percent
D. 4 Percent