Question

1)ag=rk when ________. Pd = 0 Pa = 0 Pd > 0 Pa > 0 b)In...

1)ag=rk when ________.

Pd
= 0

Pa
= 0

Pd
> 0

Pa
> 0

b)In the formula    g=(rPa –iPd)k,   Pd is _______________.

rate of growth on equity

average interest rate paid on debt

the leverage ratio

the proportion of assets compared to equity

c)When marginal returns from loan proceeds exceed marginal cost, increasing leverage will ________ growth.

increase

decrease

not affect

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