________ refers to the strategy of using borrowed funds to increase the rate of return for stockholders.
A) Leverage
B) Retained earnings
C) Factoring
D) Pledging

Question

Quizplus · Accepted Answer

Leverage is a strategy in finance where borrowed funds are used to increase the rate of return for stockholders. This strategy involves using debt to finance investments in the hopes of generating higher returns than the cost of the borrowed funds. It is a popular strategy for businesses and investors looking to amplify their returns, but it also carries higher risk due to the added debt. Retained earnings refer to profits that a company retains instead of distributing as dividends to shareholders. Factoring refers to a type of financing where a company sells its accounts receivable to a third party at a discount to obtain immediate cash. Pledging refers to using an asset as collateral for a loan.

________ Refers to the Strategy of Using Borrowed Funds to Increase