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

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Definitions:

Risk-Free Return

The theoretical return on investment with no risk of financial loss, often represented by the yield on government securities.

Sharpe's Measure

A metric used to evaluate the risk-adjusted return of an investment, calculating the excess return per unit of deviation in an investment.

Risk-Free Return

The return on investment that is guaranteed, with no risk of financial loss.

Wildcat Fund

An investment fund that takes higher risks in anticipation of higher rewards, often investing in unproven sectors or speculative ventures.