Which of the Following Statements Is Correct

question 51

Multiple Choice

Which of the following statements is correct?

• A)The effect of increasing a firm's use of financial leverage is to decrease the volatility of the firm's earnings.
• B)The effect of increasing a firm's use of financial leverage could be either to increase or decrease the volatility of the firm's earnings depending on how much leverage is utilized.
• C)The effect of increasing a firm's use of financial leverage is to increase the volatility of the firm's earnings.
• D)None of these statements is correct.

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Definitions:

Continental Congress

A series of legislative gatherings in the late 18th century where leaders from the Thirteen Colonies discussed and made decisions crucial to the fight for independence from Britain.

Articles of Confederation

The Articles of Confederation was the first constitution of the United States, ratified in 1781, creating a loose confederation of sovereign states and a weak central government.

Political Power

The capacity or authority to influence or control the behavior of others, especially in relation to the government or governance.

Equal Vote

The principle that every individual's vote carries the same weight in an electoral process, ensuring fairness and equality in democratic systems.