A firm may obtain financial leverage by
1) issuing bonds
2) issuing preferred stock
3) issuing common stock
4) retaining earnings
A)1 and 2
B)1 and 3
C)2 and 4
D)3 and 4

Question

A firm may obtain financial leverage by​
1) issuing bonds
2) issuing preferred stock
3) issuing common stock
4) retaining earnings
A)​1 and 2
B)​1 and 3
C)​2 and 4
D)3 and 4​

Quizplus · Accepted Answer

Financial leverage refers to the use of debt to finance a company's operations or investments. Issuing bonds and preferred stock are forms of debt financing that can increase a firm's financial leverage. Issuing common stock or retaining earnings do not involve taking on additional debt, therefore they do not increase financial leverage.

A Firm May Obtain Financial Leverage By​

A Firm May Obtain Financial Leverage By