As the leverage ratio increases, asset prices will also rise.

Name: As the leverage ratio increases, asset prices will also rise.
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Question

Quizplus · Accepted Answer

As the leverage ratio increases, investors have the ability to invest more in assets than they have available capital. This can create increased demand for assets and drive their prices up. However, it is important to note that an increase in leverage also increases risk and can lead to more volatile market conditions, which can negatively impact asset prices.

As the Leverage Ratio Increases, Asset Prices Will Also Rise