Which One of the Following Statements Concerning Financial Leverage Is

question 22

Multiple Choice

Which one of the following statements concerning financial leverage is correct?

• A)Financial leverage increases profits and decreases losses.
• B)Financial leverage has no effect on a firm's return on equity.
• C)Financial leverage refers to the use of common stock.
• D)Financial leverage magnifies both profits and losses.
• E)Increasing financial leverage will always decrease the earnings per share.

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