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Which one of the following statementsconcerning financial leverage is correct? a. If a firms debt-equity ratioincreases, the firms financial leverage decreases. b. Financial leverage affects

Which one of the following statementsconcerning financial leverage is correct?

a. If a firm’s debt-equity ratioincreases, the firm’s financial leverage decreases.

b. Financial leverage affects a firm’s earnings per sharebut not the firm’s return on equity.

c. Financial leverage refers tothe use of common stock.

d. Financial leveragemagnifies both profits and losses.

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