The Increase in Risk to Equityholders When fiNancial Leverage Is

question 7

Multiple Choice

The increase in risk to equityholders when financial leverage is introduced is evidenced by:

• A)higher EPS as EBIT increases.
• B)a higher variability of EPS with debt than all equity.
• C)increased use of homemade leverage.
• D)equivalence value between levered and unlevered firms in the presence of taxes.
• E)None of the above.

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Definitions:

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A condition characterized by serious harm or damage to the body, requiring immediate medical attention and care.

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Chemical agents that facilitate communication from one neuron to another across a synaptic gap in the nervous system.

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A type of connective tissue rich in collagen fibers, providing support and strength to various body structures.