The Financial Leverage Characteristic of Long-Term Debt Results In

question 46

Multiple Choice

The financial leverage characteristic of long-term debt results in:

• A)a reduction of the risk that creditors will not be paid.
• B)a magnification of ROE relative to what it would be without long-term debt.
• C)a magnification of ROI relative to what it would be without long-term debt.
• D)the deductibility, for income tax purposes, of dividends to stockholders.

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Definitions:

Apex

The top or highest part of something, often pointed; used in various anatomical contexts.

Auricles

The external part of the ear, also known as the pinna, which is visible on the sides of the head.

Chordae Tendineae

Tendinous cords that connect the papillary muscles to the atrioventricular valves in the heart to prevent inversion during contraction.