What Is Meant by Leverage

question 10

Multiple Choice

What is meant by leverage?

• A) It is the ability of a business to borrow from banks.
• B) It refers to the use of debt to enable higher returns to shareholders.
• C) It refers to the credit-worthiness of borrowers whom the bank extends loans to.
• D) It is the practice of re-investing shareholders' funds in the business.

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Definitions:

Average Regression Interval

Average regression interval describes the range within which the average value of the dependent variable falls, based on a linear regression model.

X Versus Y Correlation Interval

A range of values that estimates the strength and direction of the linear relationship between two variables.

Prediction Interval Estimate

An estimate of an interval in which future observations will fall, with a certain probability, given what has already been observed.

Confidence Interval Estimate

A range of values defined so that there is a specified probability that the value of a parameter lies within it.