Everything else the same, financial leverage works to a bank's advantage when:
A)the return on assets is positive.
B)the return on assets is negative.
C)fixed assets are high.
D)fixed assets are low.
E)a.and d.

Question

Quizplus · Accepted Answer

Financial leverage works to a bank's advantage when the return on assets is positive. This is because financial leverage, which refers to the use of borrowed funds to increase the return on equity, amplifies the impact of positive returns on assets. Therefore, if the return on assets is positive, financial leverage can help to boost the return on equity, which is beneficial for the bank's shareholders.

Everything Else the Same, Financial Leverage Works to a Bank's