The use of Personal borrowing to alter the degree of financial leverage is called__________?
Correct answer: A. Homemade leverage
- A. Homemade leverage
- B. Financial leverage
- C. Operating leverage
- D. None of the given optionHire An Accountant
Explanation
Homemade leverage occurs when an individual borrows personally to change the effective leverage of an investment. It allows the investor to create leverage independently of the firm's capital structure.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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