Question: Q3. (a) Deric Berhad increased its financial leverage during 2018 by taking out a loan and using the proceeds to buy back common stock. At

Q3. (a) Deric Berhad increased its financial leverage during 2018 by

Q3. (a) Deric Berhad increased its financial leverage during 2018 by taking out a loan and using the proceeds to buy back common stock. At the end of 2018, the corporation reported higher earnings per share and higher return on equity. However, its stock price declined. Discuss why this may happen. (10 marks)

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