Michigan Security Guard Licensing Practice Test

Which of the following describes leverage?

Leverage is the same as cash flow. Leverage is the use of borrowed funds to purchase assets or to finance an investment. Leverage can only be positive. Leverage is when an investor uses his equity to finance an investment.

Correct Answer:

Leverage is the use of borrowed funds to purchase assets or to finance an investment.

Explanation:

Leverage is the use of borrowed funds to purchase assets or to finance an investment.

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