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.

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Definitions:

Feasibility Report

A study conducted to assess the practicality and potential success of a proposed project or system.

External Accounting

The process of handling financial records and reports for parties outside an organization, such as regulators or investors.

Informational Report

A document that provides facts, data, and insights on a specific topic, without analysis or recommendations.

Analysis

The process of examining data or information in order to understand it better, often to draw conclusions or make decisions.