Choose any of the two questions below to answer.

1. What do you understand Financial Leverage(borrowing) and its "a double-edged sword effect" for firms to mean? Assuming you are a business owner or financial analyst, since debt borrowing is an advantage to businesses and even investors(stockholders) by its effect on the realized returns.

or

2. We want markets to function efficiently so that flows of funds are not hindered or impaired in the economy since it affects our standard of living.

1. State two ways markets can be efficient
2. Briefly describe the three forms of informational efficiency.