Using borrowed funds to generate returns for the shareholders is called
A)leverage.
B)profitability.
C)taking a bath.
D)solvency.

Question

Quizplus · Accepted Answer

Using borrowed funds to generate returns for the shareholders is known as leverage. This can increase the potential return for shareholders, but also increases the risk, as the funds must be paid back with interest regardless of whether the investments generate returns.

Using Borrowed Funds to Generate Returns for the Shareholders Is