Question

An increase in financial leverage generally results in a higher return on equity (roe).

a. True

b. False

Answer 1

Explanation:

An increases in financial leverage generally result in a higher return is "" yes""

Answer 2

Answer:

True

Explanation:

This is because the leverage is likely to increase since the stock volatility is also increasing the levels of risk, which later enhances the return levels. When a company, however, is leveraged financially, it will result in a decrease in equity returns. Analysts use return on equity when the operation of efficiency measured the margins of the profits measuring assets efficiency as well as measuring the financial leverages. Therefore financial advantage resulted in higher investment.