The Use of Financial Leverage

question 59

Multiple Choice

The use of financial leverage

• A) magnifies the positive returns of futures contracts.
• B) magnifies losses of futures contracts.
• C) both A and B
• D) none of the above

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Definitions:

Cash Operating Costs

Direct expenses incurred during regular operations, such as manufacturing costs, labor, and raw materials, excluding non-cash costs like depreciation.

Automating

involves the use of systems and technology to perform tasks with minimal human intervention.

Internal Rate Of Return

A financial metric used to evaluate the profitability of an investment, calculated as the discount rate that makes the net present value (NPV) of all cash flows from the investment equal to zero.

Discount Factor(s)

A multiplier for determining the present value of future cash flows or other investments, reflecting the time value of money.