Which of the following situations represents a successful use of financial leverage?
A. A retail firm purchases merchandise at $10 and sells it for $15.
B. A firm attracts the interest of two venture capitalists and plays one against the other to gain the best deal.
C. A firm borrows money at 8% and earns an 11% return on its investment of these funds.
D. A firm issues new shares of stock and uses the proceeds from the sale to retire its outstanding debt.
Answer: C
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Which of the following is true regarding the liability of the partners in a limited partnership?
A) Both the limited and general partners have unlimited liability for the partnership debts. B) If a corporation is a partner, its shareholders have unlimited liability for the partnership debts. C) The limited partners have limited liability and the general partners have unlimited liability for the partnership debts. D) The limited partners have unlimited liability and the general partners have limited liability for the partnership debts. E) Neither the limited nor the general partners have unlimited liability for the partnership debts.
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What will be an ideal response?
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What will be an ideal response?