Which of the Following Statements Concerning a Firm's Degree of Financial

question 1

Multiple Choice

Which of the following statements concerning a firm's degree of financial leverage (DFL) is correct? Assume everything else is equal. 

• A)If the firm issues additional common stock, its DFL should increase.
• B)Compared to a lower DFL, a higher DFL implies a greater financial risk.
• C)Compared to a higher DFL, a lower DFL implies a greater financial risk.
• D)If the firm issues additional long-term debt, its DFL should decrease.
• E)The firm's DFL cannot be negative.

---

Definitions:

Relationships

The connections or associations between individuals or entities based on bonds of friendship, family, work, or other social scripts.

Initiating Structure

A leadership behavior that involves setting up clear roles, guidelines, and tasks for a group or organization to achieve its goals.

Definite Standards

Clear and precise criteria or benchmarks that must be met or followed.

Standard Procedures

Established methods or protocols used regularly to achieve specific tasks or objectives efficiently.