Which of the following contributed most to many companies becoming highly leveraged in the lead-up to the recent economic downturn in 2008?
A) high interest rates
B) low interest rates
C) limited liquidity
D) no liquidity

Question

Quizplus · Accepted Answer

B) Very low interest rates encouraged companies to borrow far more than they should have during the years that led up to the downturn. Ratios of debt to assets soared, creating highly leveraged companies. Had borrowing not been so cheap, many companies might have avoided overborrowing.

Which of the Following Contributed Most to Many Companies Becoming