Using Financial Leverage Is a Good Financial Strategy from the Viewpoint

question 12

Multiple Choice

Using financial leverage is a good financial strategy from the viewpoint of stockholders of companies having:

• A)a high debt ratio.
• B)cyclical highs and lows.
• C)steady or rising profits.
• D)a steadily declining current ratio.
• E)none of the answers are correct.

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Definitions:

Government Agency

An organization established by the government to implement policy, carry out public services, or regulate activities within its jurisdiction.

Incentives

Factors, monetary or non-monetary, that motivate individuals or entities to behave in certain ways.

Social Choice

A theoretical framework for analysis of combining individual preferences, interests, or welfare to reach a collective decision or social welfare in a given society.

Aggregating

The process of combining multiple pieces of data or information into a single comprehensive whole.