Ask Question
BusinessBusiness
13 April, 23:52

Other things held constant, an increase in financial leverage will decrease a for-profit business's market risk as measured by its beta coefficient.

True or False?

+4
Answers (1)
  1. 14 April, 00:55
    0
    False because if the financial leverage is growing then the Financial risk will start growing and this increase in the financial risk will increase the beta. Furthermore this increase in financial leverage is also responsible for the increase in the Bankruptcy Risk.

    Remember the beta factor is directly proportional to market risk (Systematic Risk) this means if the market risk is increasing then the beta will also increase and if the market risk is decreasing then the beta is decreasing. This is evident from the fact that people require more returns from their investments in Asia than USA. The reason is that the Market risk in Asian countries is more than United states of America.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Other things held constant, an increase in financial leverage will decrease a for-profit business's market risk as measured by its beta ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
In some cases, researchers are interested in very large groups such as all the inmates of the u. s. prison system. in this case, what would all of the inmates represent?
Answers (2)
The marginal utility of the last unit of apples consumed is 12 and the marginal utility of the last unit of bananas consumed is 8. What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium? A. $4 and $6 B.
Answers (1)
Stephanie is a real estate salesperson employed by Pacific Coast Properties. She sells a home listed by another broker, Island View Realty.
Answers (1)
Depreciation on equipment for the year is $6,300. (a) Record the journal entry if the company prepares adjustments once a year. (b) Record the journal entry if the company prepares adjustments on a monthly basis.
Answers (1)
The average cost per seat on the 75-passenger Get-There-Safe Bus company's trip from Milwaukee to Minneapolis, on which no refreshments are served, is $37. In advance of a particular trip, three seats remain unsold.
Answers (1)
New Questions in Business
Advertising should focus on benefits more than features. What are benefits? A. Ways a product will improve a customer's life by solving problems or making the customer feel good B. The notable qualities or characteristics of a product C.
Answers (1)
On January 1, Read, a nongovernmental not-for-profit organization, received $20,000 and an unconditional pledge of $20,000 for each of the next 4 calendar years to be paid on the first day of each year.
Answers (2)
Consumer products such as furniture and appliances are typically distributed using what kind of distribution
Answers (1)
The competitive firm's short-run supply curve is its A. marginal cost curve. B. marginal cost curve, but only the portion above the minimum of average total cost. C.
Answers (1)
When consumers buy a product what are they creating
Answers (1)
Home » Business » Other things held constant, an increase in financial leverage will decrease a for-profit business's market risk as measured by its beta coefficient. True or False?
Sign Up Forgot Password?