A firm's assets are finance with 60 percent debt and 40 percent common equity. As a result, we know that the firm must have:
A. a degree of operating leverage (DOL) that is greater than 1.0.
B. a degree of financial leverage (DFL) that is greater than 1.0.
C. a degree of equity leverage (DEL) that is greater than 1.0.
D. fixed operating costs.
E. paid common stock dividends last year.
Answer: B
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