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An increase in a firm's leverage ratio tends to decrease the expected profit per unit of capital but increases the amount of risk associated with

An increase in a firm's leverage ratio

tends to decrease the expected profit per unit of capital but increases the amount of risk associated with the firm.

tends to increase the expected profit per unit of capital but decreases the amount of risk associated with the firm.

tends to increase the expected profit per unit of capital and increase the amount of risk associated with the firm.

tends to decrease the expected profit per unit of capital and decrease the amount of risk associated with the firm.

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