As the Degree of Financial Leverage Increases, The

question 44

Multiple Choice

As the degree of financial leverage increases, the:

• A) probability a firm will encounter financial distress increases.
• B) amount of a firm's total debt decreases.
• C) less debt a firm has per dollar of total assets.
• D) number of outstanding shares of stock increases.
• E) accounts payable balance decreases.

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Definitions:

Labor Market

The supply of available workers in relation to available employment.

Product Market

The marketplace where final goods or services are traded between sellers and consumers.

Financialization

The process by which financial markets, financial institutions, and financial elites gain a greater influence over economic policy and economic outcomes.

Labor Relations

The study and practice of managing the relationships between employers and their workforce, including the negotiation of collective bargaining agreements and handling of disputes.