If a Firm Increases Its Use of Financial Leverage,then What

question 2

Multiple Choice

If a firm increases its use of financial leverage,then what would we generally expect for the effect of that increased leverage to have on an EPS that is already very low?

• A) EPS would be lower with financial leverage
• B) EPS would always be the same with financial leverage
• C) EPS would be higher with financial leverage
• D) it is not possible to determine

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Definitions:

Contextual Intelligence

The ability to understand the limits of our knowledge and to adapt that knowledge to an environment different from the one in which it was developed.

Statistics Class

An academic course that focuses on the collection, analysis, interpretation, and presentation of data.

Testing Situation

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Binet Intelligence Test

A psychological test developed by Alfred Binet and Theodore Simon that measures intelligence through a series of tasks and questions.