Higher equity multiplication means that a firm is using a greater amount of ________ to finance its productive assets.
A) income
B) collateral
C) debt
D) resources

Question

Quizplus · Accepted Answer

Equity multiplication refers to the use of debt financing to acquire productive assets, which amplifies the potential return on equity. This occurs because the firm is able to generate income from the assets acquired using borrowed funds, which boosts profits for shareholders. Therefore, a higher equity multiplication implies that a firm is using more debt to finance its assets.

Higher Equity Multiplication Means That a Firm Is Using a Greater