You Find That a Firm That Uses Debt Has a Compound

question 6

Multiple Choice

You find that a firm that uses debt has a compound leverage factor less than 1. This tells you that ________.

• A) the firm's use of financial leverage is positively contributing to ROE
• B) the firm's use of financial leverage is negatively contributing to ROE
• C) the firm's use of operating leverage is positively contributing to ROE
• D) the firm's use of operating leverage is negatively contributing to ROE

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Definitions:

Erythr/o

A prefix used in medical terms to denote a relation to red or red blood cells.

Hemat/o

A prefix relating to blood.

Septicemia

A serious bloodstream infection that can lead to sepsis, a potentially life-threatening condition.

Hemostasis

The process by which bleeding is stopped via blood clotting after a blood vessel injury.