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Which one of the following statements concerning financial leverage is correct? I. Financial leverage increases profits and decreases losses. II. Financial leverage has no effect

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Which one of the following statements concerning financial leverage is correct? I. Financial leverage increases profits and decreases losses. II. Financial leverage has no effect on a firm's return on equity. III. Financial leverage refers to the use of debt. IV. Financial leverage magnifies both profits and losses. V. Increasing financial leverage will always decrease the earnings per share. I and III III and IV IV only I only

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