TRUE OR FALSE

1) If you think that interest rates will increase, you should move into long-term bonds with low coupon rates.

2) A 20-year bond will be more sensitive to yield changes than the 30-year bond.

3) Business risk is one of the major risks faced by a firm and can be defined as the variability of EBIT.

4) If a 10% change in sales results in a 10% change in EBIT, we would say that the degree of operating leverage (DOL) is 0.5.