Which of the statements below is FALSE?
A)When a company performs well,it can handle more debt and benefit the owners.
B)Borrowing from debt lenders at one rate and investing the money in the business and making a higher rate is bad for the owners.
C)Assume that the more debt the company has sold,the better off the shareholders are.This is the case where the earnings reflect a return greater than the cost of debt.
D)Financial leverage is the degree to which a firm or individual utilizes borrowed money to make money.

Question

Quizplus · Accepted Answer

Borrowing from debt lenders at a lower rate and investing the money in the business and making a higher rate is actually good for the owners. This is because the owners can keep the difference between the two rates as profit.

Which of the Statements Below Is FALSE