Financial Leverage Is Defined as the Benefits That May Result

question 8

True/False

Financial leverage is defined as the benefits that may result to an investor by borrowing money at a rate of interest that is lower than the expected rate of return on total funds invested in a property.

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Definitions:

Unions

Organizations of workers that try to raise wages and improve working conditions for their members by bargaining collectively.

Marginal Product of Labor

This refers to the additional output a firm gains from hiring one more unit of labor, holding all other factors constant.

Surplus

Surplus refers to the situation where the quantity of a product or service supplied in a market exceeds the quantity demanded at the current price.

Compensating Differentials

Wage differentials that compensate workers for the job attributes, such as difficulty or undesirable conditions.