Practice mode Finance

What is the use of personal borrowing to change the degree of financial leverage called?

Correct answer C. Homemade leverage

Explanation

Homemade leverage, from Modigliani and Miller's theory, means investors can borrow or lend personally to recreate any capital structure, undoing the firm's own leverage choice.

Report a problem

Answer checked 11 October 2026 How we write and check questions

Tip: press A, B, C or D to answer, and N for the next question.

What is the use of personal borrowing to change the degree of financial leverage called?

Discussion

Have a question about this answer? Cancel reply

What is the use of personal borrowing to change the degree of financial leverage called?

More Finance questions

Which term refers to the extent to which fixed-income securities, such as debt and preferred stock, are used in a firm’s capital structure?

Which is the cheapest source of financing available to a firm?

Average accounting return measures accounting profit relative to what?

Under the profitability index (PI) rule, an investment should be accepted if the index is greater than what value?

Discussion

Have a question about this answer? Cancel reply