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In: Finance

Financial leverage will ________ shareholders' expected return and ________ shareholders' risk. increase; do nothing to decrease;...

Financial leverage will ________ shareholders' expected return and ________ shareholders' risk.

increase; do nothing to

decrease; increase

increase; decrease

increase; increase

Solutions

Expert Solution

Financial leverage is increased use of debt to buy more assets,

Financial leverage will increase shareholders expected return and increase shareholders risk.

Use of financial leverage increases the return on equity but as it increases the debt of the company it also increases the risk too.

jeff jeffy answered 1 year ago
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