Question
debt/equity ratio (gearing) expected rate of return on equity p=0% p=5% p=10% p=15% 0.5 -- -- -- -- 1.5 -- -- -- -- 2.5 --
| debt/equity ratio (gearing) | expected | rate | of return | on equity |
| p=0% | p=5% | p=10% | p=15% | |
| 0.5 | -- | -- | -- | -- |
| 1.5 | -- | -- | -- | -- |
| 2.5 | -- | -- | -- | -- |
complete table above for expected rate of return on equity for different rates, assume rate of interest on debt is 5%
what can you say about the impact of primary gearing on the variability of return on equity?
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes
7th Edition
0072866578, 9780072866575
