Richard Nielson defines leverage as which of the following
A)A strategy designed to reduce one's risk
B)The amount of money borrowed relative to the amount of capital owned or invested
C)A financial engineering instrument
D)A form of insurance against risky investments

Question

Quizplus · Accepted Answer

Leverage refers to the amount of money borrowed relative to the amount of capital owned or invested. It is a measure of how much debt a company uses to finance its assets. Option A is incorrect because leverage increases risk instead of reducing it. Option C refers to financial engineering instruments in general, not just leverage. Option D refers to hedging, which is a separate concept from leverage.

Richard Nielson Defines Leverage as Which of the Following