Suppose a firm's degree of financial leverage (DFL) is 1.0. Which of the following statements concerning this firm is correct?

Select one:

a.The firm has no long-term debt, preferred stock, or other sources of financing that require fixed payments.

b.The firm's earnings per share (EPS) must equal zero.

c.The firm must have fixed costs associated with its production process.

d.The firm's degree of total leverage (DTL) must equal 1.0.

e.The firm's degree of operating leverage (DOL) must be greater than 1.0.

34