Question
The expected return on equity is Blank______ to leverage.
Multiple choice question.
unrelated
positively related
negatively related
Multiple choice question.
unrelated
positively related
negatively related
Answers
GPT-4o mini
The expected return on equity is **positively related** to leverage.
Leverage can amplify the returns to equity holders, as debt financing can lead to higher earnings per share when a company performs well. However, it's important to note that while leverage can increase returns, it also increases risk.
Leverage can amplify the returns to equity holders, as debt financing can lead to higher earnings per share when a company performs well. However, it's important to note that while leverage can increase returns, it also increases risk.