Which One of the Following Statements Concerning Financial Leverage Is

question 2

Multiple Choice

Which one of the following statements concerning financial leverage is correct in a world without taxes?

• A) Leverage is beneficial only when EBIT is relatively low.
• B) EPS is decreased when leverage is used and the expected level of EBIT is achieved.
• C) Financial leverage lowers the risk level of a firm.
• D) The amount of financial leverage employed has a major effect on the value of the firm.
• E) M&M Proposition I states that financial leverage is irrelevant to the value of a firm.

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Definitions:

Homeless

Individuals who lack a fixed, regular, and adequate nighttime residence, including those living in shelters or places not meant for human habitation.

Americans

People originating from or living in the United States of America.

Quintiles

Statistical values that divide a dataset into five equal parts, often used in economics to discuss income distribution.

Income

Money received, especially on a regular basis, for work or through investments.