HighLev Incorporated borrows heavily and uses the leverage to boost its return on equity to 30
this year, nearly 10 higher than the industry average. However, HighLev's stock price decreases
relative to its industry counterparts.
How is this possible?
A) The high levels of debt increased the riskiness of HighLev relative to its competitors.
B) Shareholders are not interested in return on equity.
C) Markets are inefficient and fail to recognize the benefits of leverage.
D) The increased debt resulted in interest payments that made HighLev's operating income drop
even though return on equity increased.
Question 2
Which of the following statements about the coverage for medical payments to others (Coverage F) under the homeowners policy is true?
A) Medical payments may be made for any resident of the named insured's household.
B) Medical expenses incurred within 3 years of an accident are covered.
C) Medical payments are made only if the insured is not legally liable.
D) Covered medical expenses are limited to emergency room charges.
The bypass actuator opens the bypass valve to control boost pressure.
Venous return to the heart and blood flow to the lungs.
Efficiency vs. Equity
Return to the icehouse
Fortified foods can give your diet a vitamin boost
Lever Systems and Leverage