Financial Leverage

question 148

Multiple Choice

Financial leverage

• A)increases the return to the common shareholders during good earnings years.
• B)uses lower cost borrowed funds to earn a higher rate of return on those funds than their cost.
• C)decreases the return to the common shareholders during bad earnings years.
• D)all of the above
• E)none of the above

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Definitions:

Social Responsibility

The duty of businesses and individuals to act in the best interests of society and the environment.

Stakeholders

Customers, investors, employees, and public affected by or with an interest in a company.

Profits

Net income obtained from a business's operations after subtracting expenses from revenue.

Ethical Development

The process of enhancing and enriching one’s understanding and practice of ethical standards in personal and professional contexts.