Question: Question three :( four marks) The following table summarizes the percentage changes in operating income, percentage changes in revenue and beta for three firms: Firm

Question three :( four marks) The following table summarizes the percentage

Question three :( four marks) The following table summarizes the percentage changes in operating income, percentage changes in revenue and beta for three firms: Firm % changes revenues in % change in Beta operating income ABC 23 27 1.2 27 34 1.35 TSL 25 38 1.5 a) Calculate the degree of operating leverage for each of the business firms. (3 marks) b) Use the operating leverage to explain why these firms have different betas. (1 mark)

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