The Paradox of Leverage states that:
a. Excessive leverage is really just an illusion. It occurs when companiesmisestimate the value of their assets and equity.
b.When a single firm, in isolation, tries to de-lever its balance sheet, the net effect is often for its leverage to rise.
c. Leverage is a puzzle (i.e., a paradox) and always will be.
d. When a large portion of the market tries to de-lever its balance sheet, asset prices fall, thereby causing leverage to increase (not decrease).
e. None of the above.
.D
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The Federal Reserve System has a network of how many Federal Reserve Banks?
A) 12 B) 36 C) 50 D) 84
If the federal government runs a budget deficit, but the budget deficit as a percent of GDP is less than the growth rate of real output, the:
a. national debt will decrease as a share of GDP. b. national debt will remain a constant share of GDP. c. national debt will increase as a share of GDP. d. size of the national debt (in dollar value) will decline.