Question

As leverage increases, the separation between the re increases for different rates of return to assets?

Answer 1

As leverage increases, the separation between the re increases for different rates of return to assets is a false statement.

What is leverage?

Financial leverage, often known as leverage, is the process of making an investment by using debt or borrowed cash to increase profits, buy more assets, or raise money for the business. By borrowing money or capital from lenders and making a commitment to repay the obligation together with the extra interest, people or companies incur debt. Thus, using leverage can also refer to trading stocks. When a corporation or someone is described as highly leveraged, it signifies that their debt burden exceeds their equity. Knowing this enables investors to choose wisely before making an investment in any real estate, business, or corporation.

Thus, the given statement is a false statement.

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