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esturi 15 Question 15 1 points Ser Mr. Lemon is considering investing some money in one of two different companies. ABC Limited is highly leveraged:
esturi 15 Question 15 1 points Ser Mr. Lemon is considering investing some money in one of two different companies. ABC Limited is highly leveraged: DEF is unleveraged. If Canada economy suddenly worsens and a recession threatens, how will this slowing economy affect each of the two companies? ABC will see their company earnings shrink faster than DEF earnings DEF will see their company earnings shrink faster than DEF earnings DEF would see their earnings grow more rapidly in good economic times, but earnings would grow more slowly during a recession The amount of leverage has no impact on company earnings What is the expected effect on the value of BNN Corporation (using the Dividend Discount Model calculation) if the expected constant growth rate for dividends is reduced? Required rate of return will rise The value of BNN will increase The future price of BNN shares will fall The value of BNN will decrease
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