1.

. 2.

A firm with greater operating leverage: O a. Shows a lower percentage change in earnings for a given percentage change in sales. O b. Will have greater sales than otherwise identical firms. O c. Tends to make greater use of variable costs in its cost structure. O d. Shows a higher percentage change in earnings for a given percentage change in sales. Calculate the required return on a stock that just paid a $3 dividend, has a current price of $350, and a permanent growth rate of 5 percent: O a. 5.9% O b. 1.33% O c. 6.35% O d. 7.41%