A company that uses leverage is attempting to earn an overall return that is higher than the cost of funds received from
A)preferred and common stockholders.
B)common stockholders only.
C)customers.
D)borrowing.

Question

Quizplus · Accepted Answer

When a company uses leverage, it borrows money to invest in assets that are expected to generate a higher return than the cost of the borrowed funds. Therefore, the overall return is expected to be higher than the cost of borrowing.

A Company That Uses Leverage Is Attempting to Earn an Overall