Higher the Debt Ratio, More the Financial Leverage a Firm

question 88

True/False

Higher the debt ratio, more the financial leverage a firm has and thus, the greater will be its risk and return.

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Definitions:

Hierarchical Regression

A statistical method that allows for the examination of the incremental predictive power of independent variables added sequentially to a model.

Predictor Variable

In statistical analysis, it is a variable that is utilized to predict the score of another variable, often referred to as the outcome or dependent variable.

Criterion Variable

The dependent variable in an experimental design, which is influenced or predicted by other variables.

Mediator Variable

A variable that explains the mechanism through which an independent variable influences a dependent variable in a causal relationship.