The primary advantage of using financial leverage is c. Increased potential returns for shareholders.

Here's why:

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In other words, when a company uses financial leverage, it essentially borrows money to invest in a project, asset, or other investment.

If the investment is successful, the returns (profits) will be higher than they would have been if the company had only used its own money (equity). This is because the company is able to control a larger amount of assets relative to its investment.

Therefore, the primary advantage of financial leverage is that it can increase potential returns for shareholders. However, it's important to note that while leverage can amplify returns, it can also amplify losses if the investment does not perform well.

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The primary advantage of using financial leverage is c. Increased potential returns for shareholders.

Here's why:

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In other words, when a company uses financial leverage, it essentially borrows money to invest in a project, asset, or other investment.

If the investment is successful, the returns (profits) will be higher than they would have been if the company had only used its own money (equity). This is because the company is able to control a larger amount of assets relative to its investment.

Therefore, the primary advantage of financial leverage is that it can increase potential returns for shareholders. However, it's important to note that while leverage can amplify returns, it can also amplify losses if the investment does not perform well.

Knowee AI · Accepted Answer

The primary advantage of using financial leverage is c. Increased potential returns for shareholders.

Here's why:

Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In other words, when a company uses financial leverage, it essentially borrows money to invest in a project, asset, or other investment.

If the investment is successful, the returns (profits) will be higher than they would have been if the company had only used its own money (equity). This is because the company is able to control a larger amount of assets relative to its investment.

Therefore, the primary advantage of financial leverage is that it can increase potential returns for shareholders. However, it's important to note that while leverage can amplify returns, it can also amplify losses if the investment does not perform well.

What is the primary advantage of using financial leverage?a.Decreased volatility in stock pricesb.Lower interest paymentsc.Increased potential returns for shareholdersd.Reduced dependence on external financing

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