Multiple Choice
Conservatively leveraged Firm C and highly leveraged Firm H operate at the same level of earnings before interest and taxes where the return on assets is greater than the cost of debt.
A) Firm C will have a higher return on equity than H.
B) Firm H will have a higher return on equity than C .
C) The return on equity will not be affected by financial leverage.
D) The return on equity will be the same at an equal level of earnings.
Correct Answer:
Verified
Correct Answer:
Verified
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