#1 "financial leverage ... a firms" (increases / decreases)

# 2 "expected ROE, ... the probability" (increases / decrease)

#3 "an consequently ... the risk borne by the" (decreases / increases)

#4 "bankruptyc, the ... its optimal debt ratio" (lower / higher)

#5 "... manager is more likely to use" (a consertive / an agressive)

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Given the ROE-related findings above for both Red Snail and Hungry Whale, answer the following question: The use of financial leverage a firm's expected ROE the risk borne by the firm's stockholders. the probability of a large loss, and consequently The greater a firm's chance of bankruptcy, the its optimal debt ratio will be. manager is more likely to use debt in an effort to boost profits