Solved

The Increase in Risk to Equity Holders When Financial Leverage

Question 38

Multiple Choice

The increase in risk to equity holders when financial leverage is introduced is evidenced by:


A) higher EPS as EBIT increases.
B) a higher variability of EPS with debt than all equity.
C) increased use of homemade leverage.
D) equivalence value between levered and unlevered firms in the presence of taxes.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions