Which of the following methods of financing increases the financial leverage of the business?

Question

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The sales of bonds by a C corporation increase the financial leverage of the business as it involves borrowing money from investors and paying interest on the principal amount. This increases the company's debt-to-equity ratio and financial risk. Sales of common stock and reinvestment of income earned do not involve borrowing and hence do not increase financial leverage. Additionally, the sales of additional partnership interests by a general partnership may result in dilution of ownership but do not directly increase financial leverage.

Which of the Following Methods of Financing Increases the Financial