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The following table summarizes the percentage changes in operating income, percentage changes in revenue, and betas for 3 firms. Firm % change in revenue A
The following table summarizes the percentage changes in operating income, percentage changes in revenue, and betas for 3 firms. Firm % change in revenue A 26 B C 20 33 % change in operating income Beta 33 1.15 39 1.39 31 1.00 a. Calculate the degree of operating leverage for each of these firms. b. Use the operating leverage to explain why these firms have different betas. c. If we say firm A was impacted by the market with 90%. What does that mean? Which coefficient does tell us that conclusion
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