Everything else equal,an industry with more leverage will have a ________.
A)higher return on assets
B)higher return on equity
C)lower return on equity
D)Both A and B

Question

Quizplus · Accepted Answer

A higher leverage means the company is using more debt to finance their operations, which increases the financial risk. However, if the company uses this leverage to invest in high-return projects, then the return on equity will increase. Therefore, with everything else equal, an industry with more leverage will have a higher return on equity. The return on assets may also be higher, but it does not directly depend on leverage.

Everything Else Equal,an Industry with More Leverage Will Have a ________