Asked by Travis Entwisle on May 12, 2024
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When a company borrows money in addition to shares,it creates leverage.
Leverage
The use of borrowed capital or financial instruments to increase the potential return of an investment.
Borrows Money
The act of receiving funds from another party under the agreement to return the principal amount along with interest or other charges.
Shares
A form of financial ownership in a company, giving the holder a portion of the profits and voting rights.
- Understand the concept of financial leverage and its effects on a company's financial flexibility and shareholder return.
Verified Answer
Learning Objectives
- Understand the concept of financial leverage and its effects on a company's financial flexibility and shareholder return.
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