The Financial Leverage Characteristic of Long-Term Debt Results In

question 46

Multiple Choice

The financial leverage characteristic of long-term debt results in:

• A)a reduction of the risk that creditors will not be paid.
• B)a magnification of ROE relative to what it would be without long-term debt.
• C)a magnification of ROI relative to what it would be without long-term debt.
• D)the deductibility, for income tax purposes, of dividends to stockholders.

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Definitions:

Face Saving

Actions taken to preserve one's own or another's reputation or dignity in a social context.

Wage Concession

An agreement where workers agree to lower their wages or benefits to help the employer reduce costs, often to avoid layoffs.

Union Representative

A designated individual who represents and defends the interests of union members within an organization.

Social Conversations

Dialogues between individuals or groups aimed at social interaction rather than transactional or informational exchanges.