Under Which of the Following Conditions Could the Overuse of Financial

question 26

Multiple Choice

Under which of the following conditions could the overuse of financial leverage be detrimental to the firm?

• A) In a stable industry.
• B) When there is cyclical demand for the firm's products.
• C) During an upswing in the business cycle.
• D) When there is low interest cost compared to return on assets.

---

Definitions:

Permanent Settlements

Communities where people reside long-term, building infrastructure and developing societies in contrast to nomadic lifestyles.

Cultural Art

Art forms that express and reflect the cultural values, traditions, and histories of specific societies or communities.

Unemployment Insurance

A government program that provides temporary financial assistance to workers who have lost their jobs through no fault of their own.

Primary Sector

The part of the economy that is involved with the extraction of raw materials from the environment, such as agriculture, fishing, and mining.