Which of the Following Is True of Debt

question 12

Multiple Choice

Which of the following is true of debt?

• A)Variation in expected EPS increases as the level of debt increases.
• B)Variation in expected EPS increases as the level of debt decreases.
• C)Variation in expected EPS is not affected as the level of debt increases.
• D)Variation in expected EPS decreases as the level of debt increases.

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Definitions:

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price, indicating the return on investment from dividend payments alone.

Price-Earnings Ratio

A valuation metric for a company's current share price compared to its per-share earnings, often used to assess if a stock is over or undervalued.

Earnings Per Share

A financial metric that calculates the portion of a company's profit allocated to each outstanding share of common stock, indicating the company's profitability.

Return On

A financial metric used to measure the efficiency of an investment or compare the efficiency of a number of different investments.