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The use of financial leverage _______(increase or decrease) the expected ROE, _______(increase or decrease) the probability of a large loss, and consequently _______(increase or decrease)

The use of financial leverage_______(increase or decrease) the expected ROE, _______(increase or decrease) the probability of a large loss, and consequently _______(increase or decrease) the risk borne by stockholders. The greater the firms chance of bankruptcy, the________ (higher or lower) its optimal debt ratio will be. _____________(A conservative or Aggressive) manager is more likely to use debt in an effort to boost profits.

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