The main disadvantage of financial leverage is that it: A) ...

[Haya94]

The main disadvantage of financial leverage is that it:
 A) increases the taxes of firms that use it.
  B) requires owners to invest even more of their own money.
  C) reduces the financial return to stockholders when times are bad.
  D) requires firms that use it to make higher dividend payments.

Question 2

Preferred stockholders receive dividends before dividends are paid to common stockholders.
 
 Indicate whether the statement is true or false

[yifu223]

Answer to Question 1

C

Answer to Question 2

True