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Samson Securities Ltd has got total assets of 2 Billion US dollar and a return on assets (ROA) of 1%. It is considering maintaining an
Samson Securities Ltd has got total assets of 2 Billion US dollar and a return on assets (ROA) of 1%. It is considering maintaining an equity base of 4% of its assets. If the rest of the funding is with borrowed money, explain the riskiness of financial leverage on its return on equity (ROE). Would the riskiness be less or more if the equity base of 8% needs to be maintained under the law of a particular country?
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