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Author Question: Consider the following statements about leverage: I. The level and variability of EPS is affected by ... (Read 55 times)

stevenposner

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on: Apr 25, 2021

Question 1

Compared with an all-equity financed firm, one that uses debt will have
◦ a lower degree of financial leverage.
◦ greater variation in EPS and ROE.
◦ lower risk.
◦ less risk of bankruptcy.
◦ lower profits per share during an economic expansion.

Question 2

Consider the following statements about leverage:

I.  The level and variability of EPS is affected by the amount of leverage.
II.  If EBIT is strong, leverage provides an even greater return to shareholders compared to the return with no leverage.
III.  Shareholders are exposed to more risk under a leveraged capital structure compared to an all equity structure.

Which of these statements, if any, are TRUE?
◦ I only
◦ II only
◦ III only
◦ I and II only
◦ I, II, and III
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by stevenposner on Apr 25, 2021

micaelaswann

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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stevenposner

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Reply 2 on: Apr 25, 2021
Thanks for the timely response, appreciate it

essyface1

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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