CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Successful use of financial leverage would be illustrated when ______
A. the rate of return on sales exceeds the cost of debt.
B. the rate of return on assets (ROA) exceeds the rate of return on stockholder's equity.
C. the rate of return on assets exceeds the cost of debt.
Explanation: Successful use of leverage is evident when more income can be generated from the use of borrowed funds (the new assets) than it costs to actually borrow the funds.

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