If a fiRm Is Using fiNancial Leverage Successfully What Would

question 122

Multiple Choice

If a firm is using financial leverage successfully what would be the impact of doubling operating earnings?

• A) The return on equity will increase, but not double
• B) The return on equity will double
• C) The return on equity will more than double
• D) The return on equity will decline by half

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Definitions:

Productivity

The effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input.

Experimental Group

The group in an experiment that receives the treatment or intervention under study, allowing researchers to measure its effects.

Room Temperature

The ambient temperature of a living space, usually considered to be around 20-22 degrees Celsius or 68-72 degrees Fahrenheit.

Aggressive Behaviour

Actions or responses by an individual that are intended to harm or intimidate another.