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:

Endorsement

The act of signing one's name on the back of a check or other negotiable instrument, which allows it to be transferred or cashed.

Payees

Individuals or entities to whom money is payable, often seen in the context of checks or promissory notes.

Negotiation

The process of discussing and arriving at a mutual agreement between parties, often involving compromise or conciliation.

Depositary Bank

A financial institution that holds and manages securities for its clients, facilitating the trading of these securities.