The Use of Personal Borrowing to Change the Overall Amount

question 4

Multiple Choice

The use of personal borrowing to change the overall amount of financial leverage to which an individual is exposed is called:

• A)homemade leverage.
• B)dividend recapture.
• C)the weighted average cost of capital.
• D)private debt placement.
• E)personal offset.

---

Definitions:

Marginal Cost

The increase or decrease in the total cost incurred by producing one additional unit of a product or service.

Total Variable Costs

The sum of expenses that vary directly with the level of output production.

Average Total Cost

The per unit cost of production, calculated by dividing total cost by the total quantity of output produced.

Average Variable Cost

The total variable costs divided by the quantity of output produced, reflecting the per unit cost of variable inputs.