Which One of the Following Statements About Gearing Is Correct

Multiple Choice

Which one of the following statements about gearing is correct?

A) Investment in a low geared company is usually seen as relatively risky for ordinary shareholders.
B) An increase in a company's level of gearing invariably means that returns to shareholders are reduced.
C) A high level of gearing in a company gives rise to a high interest cover ratio.
D) Returns to shareholders in a highly geared company are likely to be more volatile than in a low geared company.