Accurate Information ____

question 146

Multiple Choice

Accurate information ____.

• A) is error free
• B) has meaning to the person who receives it
• C) is available when a decision maker needs it
• D) has an age suited to its use

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Definitions:

Debt

Money that is owed or due to be paid, typically resulting from borrowing funds to be repaid with interest.

Financial Leverage

Financial leverage is the use of borrowed money (debt) to amplify the potential returns from an investment or project.

Leverage

The use of borrowed funds to increase the potential return of an investment.

Optimal Capital Structure

The best mix of debt, preferred stock, and common equity that maximizes a company’s stock price while minimizing its cost of capital.