How Does Financial Gearing Affect the Extent to Which Shareholders

question 45

Multiple Choice

How does financial gearing affect the extent to which shareholders' returns vary as a result of changes in a firm's income?

• A) It has little effect on it.
• B) It magnifies the effects.
• C) It introduces a time lag.
• D) It reduces the effects.

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Definitions:

Threatens

Involves expressing an intention to cause pain, injury, damage, or other hostile action on someone in retribution for something done or not done.

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A specialized vehicle or ship designed for the transportation of gasoline or other fuel products in bulk.

Speeding

The act of driving a vehicle over the legal or safe speed limit prescribed by law.

Igniting

The act of setting something on fire or causing it to burn.