9. Operating Leverage indicates the degree to which a project (or a firm) has the fixed cost (FC). Specifically, Degree of Operation Leverage (DOL) can be measured as follows: \% change in OCF =DOL% change in Q DOL=1+FC/OCF where OCF is Operating Cash Flows and Q is quantities unit sales. ( . The above box is true. Answer the following proposition.) In general, the higher the operating leverage, the lower the break-even point. [ True / False] 10. In the efficient capital market with corporate taxes and bankruptcy costs, when the equitydebt (D/E) ratio increases, the firm's WACC decreases and then increases again after some point. [ True / False ] 11. Pecking-order theory suggests that, when the firm raises capital, the management prefers "internal equity" the most, "debt" next, and "external equity" finally. [ True / False]