If a Firm Is Using Financial Leverage Successfully What Would

question 19

Multiple Choice

If a firm is using financial leverage successfully what would be the impact of doubling operating earnings?

• A) The return on equity will double.
• B) The return on equity will increase, but not double.
• C) The return on equity will more than double.
• D) The return on equity will decline by half.

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Definitions:

Limitation Periods

Statutorily established time frames within which a legal action must be brought, after which rights to assert claims could be lost.

Government Bodies

Organizations or agencies established by a government to perform specific tasks or functions on its behalf.

Charter of Rights and Freedoms

A fundamental document in Canada that protects individual rights and freedoms from the actions and policies of all levels of government and establishes the framework for the interpretation of laws.

Reasonable Apprehension

A perception or fear of bias or prejudice that appears fair or sensible to an unbiased observer.