The concept of leverage refers to the practice of using borrowed funds and amounts received from preferred stockholders in an attempt to earn an overall return that is higher than the cost of these funds.

Question

Quizplus · Accepted Answer

This statement accurately describes the concept of leverage. By using borrowed funds and preferred stock, a company can potentially earn a higher return on investment than the cost of these funds, resulting in increased profits for shareholders. However, it also increases the company's risk and can lead to higher debt levels.

The Concept of Leverage Refers to the Practice of Using