Which One of the Following Statements Concerning Financial Leverage Is

question 66

Multiple Choice

Which one of the following statements concerning financial leverage is correct?

• A)The benefits of leverage are unaffected by the amount of a firm's earnings.
• B)The use of leverage will always increase a firm's earnings per share.
• C)The shareholders of a firm are exposed to less risk anytime a firm uses financial leverage.
• D)Changes in the capital structure of a firm will generally change the firm's earnings per share.
• E)Financial leverage is beneficial to a firm only when the firm has negative earnings.

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Definitions:

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The principle that recall is most effective when information available at the time of encoding is also available at the time of retrieval.

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