Financial Leverage: I.increases Expected ROE but Does Not Affect Its Variability

question 11

Multiple Choice

Financial leverage:
I.increases expected ROE but does not affect its variability.
II.increases breakeven,like operating leverage,but increases the rate of earnings per share growth once breakeven is achieved.
III.is a fundamental financial variable affecting sustainable growth.
IV.increases expected return and risk to owners.

• A) I and II only
• B) I and III only
• C) II and IV only
• D) II, III, and IV only
• E) I, II, III, and IV
• F) None of the above.