An levered firm is a company that:
A) is financed by common stock.
B) has some debt in the capital structure.
C) has all equity in the capital structure.
D) has no debt in the capital structure.

Question

Quizplus · Accepted Answer

A levered firm is a company that has some debt in its capital structure. The presence of debt creates financial leverage, which may increase a firm's return on equity but also increases its financial risk. Therefore, a levered firm will have both equity and debt in its capital structure.

An Levered Firm Is a Company That