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:

Consumer Surplus

The discrepancy between what consumers are prepared and capable of paying for a product or service and what they end up actually paying.

Willing To Pay

The maximum amount a consumer is prepared to spend on a good or service, reflecting the perceived value or utility gained from the purchase.

Ticket

A token or voucher that entitles the holder to admission to an event, activity, or service.

Consumer Surplus

the difference between what consumers are willing to pay for a good or service and what they actually pay.