_____ Is a Measure of the Amount of Debt Relative

question 74

Multiple Choice

_____ is a measure of the amount of debt relative to total investment.

• A) Cost of capital
• B) Financial leverage
• C) Optimum capital structure
• D) Financial risk

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Definitions:

Semi-annually

Occurring twice a year, or every six months.

Compounded

The method of calculating interest where the accumulated interest is added back to the principal sum, so that interest in the next period is then earned on the principal plus previously accumulated interest.

Principal

The original amount of money invested or loaned, before interest.

Compounded

The process of calculating interest on both the initial principal and the accumulated interest from previous periods.