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The benets hoped for in terms of nancial leverage is that a rm's borrowed funds at a stated interest rate can be invested in assets

The benets hoped for in terms of nancial leverage is that a rm's borrowed funds at a stated interest rate can be invested in assets that will generate higher returns than the interest due on the borrowed funds.

  • Why would rms with high Return On Assets (ROA) refrain from leveraging up their rm by borrowing and investing the funds in protable assets?

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