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What is the financial leverage effect and what causes it

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Reference no: EM13505602

1.Does high operating leverage always mean high business risk?  Explain.

2.What is the financial leverage effect and what causes it?  What are the potential benefits and negative consequences of high financial leverage? 

3.Give two examples of types of companies likely to have high operating leverage.  Find examples other than those cited in the chapter.    

4.Give two examples of types of companies that would be best able to handle high debt levels.. 

 

5.What is an LBO?  What are the risks for the equity investors and what are the potential rewards?

Reference no: EM13505602

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