Which One of These Best Supports the Argument That Leverage

question 78

Multiple Choice

Which one of these best supports the argument that leverage increases shareholder risk?

• A)EPS is directly related to EBIT.
• B)Individuals employ homemade leverage.
• C)EPS variability increases when leverage is used.
• D)Firm values rise with leverage in the presence of taxes.
• E)The number of shares outstanding tends to decrease when leverage is used.

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Definitions:

Ethical Recommendations

Suggestions or advice based on moral principles, aimed at guiding behavior or decision-making in a responsible manner.

Inherent Risks

The potential for loss or negative outcomes that are naturally part of a process, activity, or decision.

Matrix Approach

A management strategy that organizes projects or tasks in a grid-like structure to facilitate decision-making and resource allocation.

Request For Proposals

A formal document inviting suppliers or service providers to submit a proposal for a specific product or service.