1) LDI can produce 63,000 parts per year. At this level, the degree of operating leverage is 2.85. Fixed costs are $140,000 annually. What is the operating cash flow at this level?
2) Concering diversifiable risks, which of the following statements is true? Answer from a-e below.
I. Diversifiable risks can be essentially eliminated by investing in the market portfolio.
II. The market rewards investors for diversifiable risk by paying a risk premium.
III. Diversifiale risks are generally associated with an individual firm or industry.
IV. Beta measures diversifiable risk.
a. I and III only.
b. II and IV only.
c. I and IV only.
d. II and III only.
e. I, II, and III only.