Question: 1. A decrease in fixed operating costs will result in ________ in the degree of financial leverage. A) a decrease B) an increase C) no

1. A decrease in fixed operating costs will result in ________ in the degree of financial leverage.

A) a decrease B) an increase C) no change D) an undetermined change

2. ) Which of the following is a difference between debt and equity capital?

A) Debt capital does not require periodic payments, whereas equity capital requires period payments. B) Debt capital requires a fixed rate of return, whereas equity capital requires returns in proportion to profits. C) Debt capital does not provides a tax shield, whereas equity capital provides a tax shield. D) Debt capital affects operating leverage, whereas equity capital affects financial leverage

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