Which of the Following Statements Are Correct in Regards to Financial

question 135

Multiple Choice

Which of the following statements are correct in regards to financial leverage?

• A) Financial leverage is said to be 'negative' if the rate of return is higher than the borrowing rate.
• B) Financial leverage is said to be 'positive' if the rate of return is lower than the rate of borrowing.
• C) Financial leverage is borrowing at one rate and investing at a different rate.
• D) Financial leverage can decrease the return on equity.

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Definitions:

Quarterly Journals

Publications that release issues on a quarterly basis, often academic or professional in nature, covering specific field subjects.

Journalized

Refers to the process of recording financial transactions in the chronological order of their occurrence in a company's journal, which is a primary accounting record.

Receipt of Cash

The act of receiving cash during transactions, indicating an influx of funds.

Unearned Revenue

Money received by a company for goods or services yet to be delivered or performed, representing a liability until the obligation is fulfilled.