Financial leverage is defined as benefits that may result to an investor by borrowing money at a rate of interest that is lower than the expected rate of return on total funds invested in a property.

Question

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Financial leverage refers to the strategy of using borrowed funds to increase the potential return on investment. This can be achieved when the rate of return on the investment exceeds the cost of borrowing. Therefore, the statement is true.

Financial Leverage Is Defined as Benefits That May Result to an Investor