Why Do We Use Leverage If It Increases the Risk

question 63

Essay

Why do we use leverage if it increases the risk of a firm?

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Definitions:

Mean

A measure of central tendency that is calculated by adding all numbers in a data set and dividing by the number of observations.

Median

Value of a variable that splits a distribution of scores in half, with the same number of scores above the median as below.

Standard Deviation

A statistic used to determine the degree of spread or variation among data values in a series.

Bimodal

Describes a distribution or data set that has two distinct modes or peaks in its frequency of occurrence.