Multiple Choice
The underlying reason that leverage may increase stock price is that under certain conditions:
A) it increases risk, which in turn requires a larger return on equity.
B) it improves performance measured in terms of EBIT and EPS.
C) it improves performance measured in terms of ROE and EPS.
D) it is cheaper to raise new debt than it is to raise new equity.
Correct Answer:
Verified
Correct Answer:
Verified
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