Borrowing money rather than issuing common stock increases the potential for higher rates of return to owners.

Name: Borrowing money rather than issuing common stock increases the potential for higher rates of return to owners.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Borrowing money (debt financing) can increase the potential return on equity because it allows a company to leverage its operations, potentially increasing profits without diluting ownership. However, it also increases financial risk.

Borrowing Money Rather Than Issuing Common Stock Increases the Potential