Define Financial Leverage.

2. Increases in interest rates will cause what if a bond rate is FIXED?

1. Increase in price of bond

2. Decrease in price of bond

3. No effect on price of bond

Additional risk, over and above Business Risk, that is placed on common stockholders when a firm uses debt in its capital structure. the existence of debt in a firm's capital structure. additional risk, over and above Business Risk, that is placed on the Bondholders when a firm uses debt in its capital structure