Which of the Following Situations Represents a Successful Use of Financial

question 148

Multiple Choice

Which of the following situations represents a successful use of financial leverage?

• A) A firm issues new shares of stock and uses the proceeds from the sale to retire its outstanding debt.
• B) A firm borrows money at 8% and earns an 11% return on its investment of these funds.
• C) A firm attracts the interest of two venture capitalists and plays one against the other to gain the best deal.
• D) A retail firm purchases merchandise at $10 and sells it for $15.

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Definitions:

Domestic Market

The supply and demand for goods and services within a country's borders.

Video Games

Electronic games involving interaction with a user interface to generate visual feedback on a device, ranging from consoles to computers.

Pencil Sharpeners

Devices that shave away the wooden surface of a pencil to expose more of the lead, enabling finer writing or drawing.

Export

The selling and shipping of goods or services from one country to another.