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1. Explain in general terms the concept of return in investment. Why is this concept important in the analysis of financial performance? - 2. (a)

1. Explain in general terms the concept of return in investment. Why is this concept important in the analysis of financial performance? -

2. (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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