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A high degree of financial leverage:

Looking for the answer to the question below related to Financial Management?

A high degree of financial leverage:

 Options:

A. is a sign of astute financial management
B. will always decrease the cost of financing for the firm
C. will result in an increase of the firm’s overall value in all cases
D. may increase the firm’s risk and drive the price of the shares down

 

The Correct Answer Is:

  • D. may increase the firm’s risk and drive the price of the shares down

 

Conclusion

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