The Magnification of Risk and Return Introduced Through the Use

question 13

True/False

The magnification of risk and return introduced through the use of fixed-cost financing, such as debt and preferred stock is called financial leverage.

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Definitions:

Elastic

Describes a situation where the quantity demanded or supplied of a good changes significantly in response to price changes.

Demand

The willingness and ability of consumers to purchase goods or services at various price levels.

Revenue

The earnings a company garners from its principal operations, often through selling products and services to its clientele.

Supply

The total amount of a particular good or service that is available to consumers at a given price level in a given time period.