The Increase in Risk to Equity Holders When Financial Leverage

Multiple Choice

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

A) higher EPS as EBIT increases.
B) increased use of homemade leverage.
C) a higher variability of EPS with debt than all equity.
D) equivalence value between levered and unlevered firms in the presence of taxes.
E) None of the above.