The use of personal borrowing to change the overall amount of ﬁnancial leverage to which an individual is exposed is called:
A)homemade leverage.
B)dividend recapture.
C)the weighted average cost of capital.
D)private debt placement.
E)personal offset.

Question

Quizplus · Accepted Answer

The use of personal borrowing to change an individual's overall financial leverage is referred to as homemade leverage. This is done to change the risk and return characteristics of the individual's portfolio, without altering the overall financial leverage of the firm.

The Use of Personal Borrowing to Change the Overall Amount