In a Leveraged Firm, the Variation in ROE and EPS

question 107

True/False

In a leveraged firm, the variation in ROE and EPS will always be less than the variation in the firm's EBIT because of the lower cost of capital.

---

Definitions:

Visibility

The extent to which an individual's or group's work, contributions, or status is recognized and noticed by others, particularly by higher management.

Non-substitutability

A characteristic of a resource or skill that cannot be easily replaced or duplicated by another.

National Accounting

A system of economic accounts that provides a detailed statistical representation of a country's economic activities during a specific period.

Legislation

Legislation is the process through which laws are enacted by a governmental body.