Earning more income on borrowed money than the related interest expense, thereby increasing the earnings for the owners of the business, is called:

Question

Quizplus · Accepted Answer

Trading on the equity refers to borrowing money at a lower interest rate and using it to invest in activities that generate a higher rate of return. This strategy can increase earnings for the owners of the business, and is a form of financial leverage. The other choices (A, C, D) are not directly related to this concept.

Earning More Income on Borrowed Money Than the Related Interest