Economics · Financial Management
Assertion (A): Financial leverage refers to the use of fixed-cost sources of finance such as debt and preference shares. Reason (R): Higher financial leverage increases the variability of earnings available to equity shareholders. Choose the correct answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1(A) is false but (R) is true
- 2(A) is true but (R) is false
- 3Both (A) and (R) are true but (R) is not the correct explanation of (A)
- 4Both (A) and (R) are true and (R) is the correct explanation of (A)✓
Correct answer
Both (A) and (R) are true and (R) is the correct explanation of (A)
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