If Financial Leverage Is Used,a Rise in EBIT Will Cause

question 30

True/False

If financial leverage is used,a rise in EBIT will cause a lessor rise in net income.

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Definitions:

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation.

Risk-Free Rate

The theoretical return on an investment with zero risk, typically associated with government bonds.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase an asset at a specified price within a certain time frame.

Strike Price

The predetermined price at which an option's underlying asset can be bought or sold.