Which Statement Is Correct About Financial Leverage

question 35

Multiple Choice

Which statement is correct about financial leverage?

• A)It reduces the risk of bankruptcy to the company.
• B)It reduces the level of risk exposure of the shareholders.
• C)It quantifies the relationship between the relative level of a firm's debt and its equity base.
• D)It has nothing to do with the relationship between the relative level of a firm's debt and its equity base.

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Definitions:

Nonprofit

Organizations that operate without the primary goal of financial profit, focusing instead on philanthropic, social, educational, or other community-focused missions.

Ethical Decision-making Approaches

Methods and considerations used to make choices that reflect moral principles and values in personal actions or organizational policies.

Utilitarian Approach

Action that results in the greater good for the majority of people.

Corporate Social Responsibility

A strategy in business that promotes sustainable growth through the provision of economic, social, and environmental advantages for every stakeholder involved.