The debt a firm chooses to use is often referred to as financial:
ALicensing
BLeverage
CLaundering
DLayering
Answer & Solution
Correct answer: B. Leverage
1. Borrowing magnifies outcomes.
2. The word is borrowed from mechanics.
3. It is financial leverage.
_Source: OpenStax Principles of Finance 2e, Chapter 17, How Firms Raise Capital._
Keep practising Cost of Capital
Browse all Cost of Capital questions for CFA Level I, or explore more Finance topics.