Higher fin lev ratio is riskier?
Pg 363 answer to 5 in cfai text is fsa book.
Company a has higher financial leverage ratio than b. Therefore A is riskier than b.
If A had a higher asset/ equity ratio than b then doesn't that mean it has less debt as a percentage of it's equity? I don't understand why having more assets to equity is riskier than less assets to equity. |