If a Firm's Earnings Should Drop Below the Interest Cost

question 46

True/False

If a firm's earnings should drop below the interest cost of borrowed money, the return on owners' equity will increase.

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Definitions:

Cohesive

Characteristics of a group or material that hold it together, uniting elements to function or act as a single entity.

Diffusion of Responsibility

A sociopsychological phenomenon where individuals are less likely to take action or feel a sense of responsibility in the presence of others.

Collaboratively

Working together with one or more people in order to achieve a common goal or produce a shared outcome.

International Fan Club

An organization that unites fans of a specific subject or entity from different parts of the world.