Two Firms That Have the Same Financial Leverage Must Also

question 7

True/False

Two firms that have the same financial leverage must also have the same ROE,because both financial leverage and ROE measure the risk associated with equity financing.

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Definitions:

Superseding Causes

Events that occur after a defendant's negligent act, breaking the chain of causation and relieving the defendant of liability.

Comparative Negligence

A legal doctrine under which a plaintiff's damages are reduced by a percentage equal to their degree of fault in causing their injury.

Strict Liability

A legal doctrine holding individuals or entities responsible for damages or injuries caused by their actions or products, regardless of negligence or intent.

Contributory Negligence

A legal doctrine that can reduce the claimant's ability to recover damages if they are found partly at fault for the incident or harm.