Which one of the following statements concerning financial leverage is correct? a)Financial leverage increases profits and decreases...

50.1K

Verified Solution

Question

Finance

Which one of the following statements concerning financialleverage is correct?
a)Financial leverage increases profits and decreases losses.
b)Financial leverage has no effect on a firm's return onequity.
c)Increasing financial leverage decrease a firm’s businessrisk
d)Financial leverage creates tax shield.

Answer & Explanation Solved by verified expert

4.4 Ratings (738 Votes)

Option D Financial leverage creates tax shield is correct Explanation Financial leverage are debts taken by companies to finance their businesses whereas tax shield results in See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Which one of the following statements concerning financialleverage is correct? a)Financial leverage increases profits and decreases losses.b)Financial leverage has no effect on a firm's return onequity.c)Increasing financial leverage decrease a firm’s businessriskd)Financial leverage creates tax shield.

		a)Financial leverage increases profits and decreases losses.
		b)Financial leverage has no effect on a firm's return onequity.
		c)Increasing financial leverage decrease a firm’s businessrisk
		d)Financial leverage creates tax shield.