An Investor Can Create the Effect of Leverage on His/her

question 71

Multiple Choice

An investor can create the effect of leverage on his/her account by
I.buying equity of a levered firm;
II.investing in risk-free debt like T-bills;
III.borrowing on his/her own account

• A)I only
• B)II only
• C)III only
• D)I and III only

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Definitions:

Tax

A compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Flexible Benefits

A program that allows employees to choose from a range of benefit options.

Employee Benefits

Various types of non-wage compensation provided to employees in addition to their normal wages or salaries.

Dollar Amount

The total monetary value or cost expressed in units of currency, often used to specify prices, costs, and financial transactions.