Based on the current events in our economy

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Based on the current events in our economy, please keep this in mind. When interest rates are held more or less at a constant rate and price risk remains stable, financial leverage does not greatly impact changes is stock return at the market level. However, when price risk takes hold and interest rates fluctuate, you will see significant swings in stock return. Then financial leverage adds more to stock volatility for a small firm rather than larger corporations. Why do you think this is?

Reference no: EM131096749

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