Successful Use of Financial Leverage Requires a Firm to

question 191

Multiple Choice

Successful use of financial leverage requires a firm to

• A) negotiate with lenders to establish a line of credit.
• B) establish and operate a venture capital organization to minimize the use of equity financing.
• C) register with the local government commission that administers market leverage.
• D) earn a higher return on its investments than the interest rate it pays to acquire funds.

---

Definitions:

Marginal Cost

Marginal cost is the additional cost incurred from producing one more unit of a good or service.

Producing Bagels

The process of making bagels, which involves mixing, shaping, boiling and then baking dough, typically in a commercial or artisanal bakery setting.

Total Cost

The complete cost of producing a specific quantity of goods or services, including fixed and variable costs.

Average Fixed Cost

Production's unchanging overheads split by the volume of goods produced.