The Reason That Financial Leverage Increases Shareholder Risk Is That

question 47

Multiple Choice

The reason that financial leverage increases shareholder risk is that there is:

• A)More debt which increases the operating risk
• B)Less equity to absorb the operating risk
• C)Less business risk to be spread around
• D)More financial risk due to reduced business risk

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Definitions:

X-Ray Images

Pictures obtained by using X-ray technology to visualize the internal structures of the body, aiding in medical diagnosis.

Screen Monitor

An electronic output device that displays information in pictorial form, usually used with computers.

Projecting

The act of extending outwards or forwards or the act of estimating or forecasting something based on current trends or data.

Posteroanterior

An orientation term in radiology indicating that an x-ray beam passes from the back to the front of the body.