The Higher the Debt Ratio, the More Financial Leverage a Firm

question 183

True/False

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

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Definitions:

Global Investments

Investing in assets or securities from around the world to diversify investment portfolios and manage risk.

U.S. Investments

Financial investments made within the United States, encompassing a wide range of asset classes, including stocks, bonds, and real estate.

Defined Benefit Plan

A type of pension plan in which an employer promises a specified pension payment upon retirement, based on the employee's earnings history, tenure of service, and age.

Investment Performance

Investment performance measures how well an investment is doing, based on returns relative to risk and compared to a benchmark or other standard.