(a) Explain how an increase in financial leverage can increase a company's ROE. (b) Given the potentially...

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(a) Explain how an increase in financial leverage can increase a company's ROE. 

(b) Given the potentially positive relation between financial leverage and ROE, why don't we see companies with 100% financial leverage (entirely nonowner financed)?

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Financial Accounting

ISBN: 9781618533111

6th Edition

Authors: Michelle L. Hanlon, Robert P. Magee, Glenn M. Pfeiffer, Thomas R. Dyckman

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