The use of financial leverage, or fixed-cost sources of capital, involves a trade-off between its effect on the firm's shareholders and its effect on the riskiness of the firm. Read each statement below, and indicate whether Statement 1, Statement 2, or both statements are correct, or neither statement is correct. Statement 1
1. When its earnings are increasing, the use of greater levels of debt capital in a firm's capital structure magnifies the positive return earned by the firm's shareholders beyond that earned by the shareholders of an otherwise identical unlevered firm
Statement 2
2. One result associated with a firm's use of increased financial leverage is an increase in the firm's risk of insolvency.
Which response is correct?
a. Both statements are correct.
b. Only Statement 1 is correct
c. Only Statement 2 is correct
d. Neither statement is correct.

Which of the following best explains why treasury bonds have an effect on the size of the money supply? a. the amount of treasury bonds in circulation affects both unemployment and inflation. b. the government can spend more money and charge lower taxes by using treasury bonds. c. the federal reserve bank can buy and sell these bonds to raise or lower bank deposits. d. the interest paid on treasury bonds influences the interest rates charged by private banks. 2b2t

Gdonald was unhappy that his company did not provide good transport facilities. he found it very strenuous to drive to work on his own, and this eventually led to job dissatisfaction. hence, he recommended ways to solve this problem. according to the evln model, this information suggests that donald's main reaction to job dissatisfaction was:

Stocks a, b, and c are similar in some respects: each has an expected return of 10% and a standard deviation of 25%. stocks a and b have returns that are independent of one another; i. e., their correlation coefficient, r, equals zero. stocks a and c have returns that are negatively correlated with one another; i. e., r is less than 0. portfolio ab is a portfolio with half of its money invested in stock a and half in stock b. portfolio ac is a portfolio with half of its money invested in stock a and half invested in stock c. which of the following statements is correct? a. portfolio ab has a standard deviation that is greater than 25%.b. portfolio ac has an expected return that is less than 10%.c. portfolio ac has a standard deviation that is less than 25%.d. portfolio ab has a standard deviation that is equal to 25%.e. portfolio ac has an expected return that is greater than 25%.