The increase in risk to equityholders when financial leverage is introduced is evidenced by:
A) higher EPS as EBIT increases.
B) a higher variability of EPS with debt than all equity.
C) increased use of homemade leverage.
D) equivalence value between levered and unlevered firms in the presence of taxes.
Answer: B) a higher variability of EPS with debt than all equity.
Business
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What will be an ideal response?
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