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Financial Leverage Is Positive When a Company Borrows Funds at a Low

question 102

True/False

Financial leverage is positive when a company borrows funds at a low interest rate and invests those funds at a higher interest rate.That is,positive financial leverage uses borrowed funds to increase the return to shareholders.


Definitions:

Coelom

The fluid-filled body cavity between the intestinal canal and the body wall in triploblastic animals, providing space for the development of internal organs.

Protostomes

A group of animals characterized by developing the mouth before the anus during embryonic development.

Tapeworms

Parasitic flatworms that live in the digestive tracts of vertebrates, absorbing nutrients from the host's intestine.

Choanoflagellates

A collective of independent, single-celled and colonial flagellated eukaryotic organisms regarded as the nearest living kin to animals.

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