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Which one of the following statements concerning financial leverage is correct?   a)Financial leverage increases profits and decreases...

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Finance

Which one of the following statements concerning financialleverage is correct?  

a)Financial leverage increases profits and decreases losses.

b)Financial leverage has no effect on a firm's return onequity.

c)Increasing financial leverage decrease a firm’s businessrisk

d)Financial leverage creates tax shield.

Answer & Explanation Solved by verified expert
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Option D Financial leverage creates tax shield is correct Explanation Financial leverage are debts taken by companies to finance their businesses whereas tax shield results in    See Answer
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Transcribed Image Text

Which one of the following statements concerning financialleverage is correct?  a)Financial leverage increases profits and decreases losses.b)Financial leverage has no effect on a firm's return onequity.c)Increasing financial leverage decrease a firm’s businessriskd)Financial leverage creates tax shield.

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