Financial Leverage ________

question 39

Multiple Choice

Financial leverage ________.

• A)is always good for companies
• B)refers to using borrowed money to increase earnings
• C)is risk free
• D)is the degree of negotiating ability

---

Definitions:

Market Price

The rate at present for the purchase or sale of a service or asset.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with dividends that are paid out before those to common shareholders.

Bonds Outstanding

The total amount of issued bonds that are currently held by investors and not yet redeemed.

Cost of Equity

The return that investors expect for investing in a company's equity, reflecting the compensation for the risk of investing.