The Reason That Financial Leverage Increases Shareholder Risk Is That

question 79

Multiple Choice

The reason that financial leverage increases shareholder risk is that there is:

• A) more debt which increases the operating risk.
• B) less equity to absorb the operating risk.
• C) less business risk to be spread around.
• D) more financial risk due to reduced business risk.

---

Definitions:

Owners And Workers

Used to describe the two key groups within a capitalist economic system: those who own the means of production and the employees they hire.

Strikes

Work stoppages caused by the mass refusal of employees to work, usually in protest against working conditions, policies, or other labor issues.

Factory Conditions

The working conditions in manufacturing establishments, often highlighted by issues related to worker safety, health hazards, and long hours.

1830s

A decade characterized by significant political, social, and technological changes around the world, including the start of the British Industrial Revolution.