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The ____Hypothesis Posits That a Firm May Choose High Leverage

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The ____hypothesis posits that a firm may choose high leverage as a competitive strategy to either win market share from rivals or to deter entry into the industry.


Definitions:

Sector Rotation

An investment strategy that entails shifting the portfolio into industry sectors that are forecast to outperform others based on macroeconomic forecasts.

Portfolio

An assortment of financial assets encompassing shares, fixed income securities, raw materials, liquid cash, and near-cash items, along with inclusive of pooled investment vehicles like closed-end funds and ETFs.

Industry

An industry is a group of companies that are related based on their primary business activities.

Local Currency Return

The return on an investment denominated in the currency of the country where the investment is made.

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