When Investors Use Leverage in Their Own Portfolios to Adjust

question 44

Multiple Choice

When investors use leverage in their own portfolios to adjust the leverage choice made by the firm, it is referred to as ________.

• A) outside debt
• B) retained earnings
• C) homemade leverage
• D) payout ratio

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Definitions:

Gross Accounts Receivable

The sum of money that a company's customers owe before subtracting any provisions for accounts that might not be collectible.

Net Accounts Receivable

The total amount of money owed to a company for goods or services that have been delivered but not yet paid for, minus any provisions for bad debts.

Allowance for Uncollectible Accounts

An estimated reserve for debts that may not be collected due to customer default.

Default Rate

A measure reflecting the percentage of borrowers who fail to make payments on their debts as scheduled.