Question: Multiple Select Question Select all that apply Which of the following statements regarding financial leverage are true? Positive financial leverage means that the interest rate
Multiple Select Question
Select all that apply
Which of the following statements regarding financial leverage are true?
Positive financial leverage means that the interest rate associated with borrowed funds is greater than the ROI of the firm.
Financial leverage adds risk to the firm because the interest cost of debt is usually a fixed percentage.
If a firm's ROI exceeds the interest rate of the borrowed funds, then ROE will be greater than ROI.
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
