If a corporation is highly leveraged will by Dr. Robert Murphy @Mises

Question 91 / 96: If a corporation is highly leveraged, will its stock be more likely to appeal to a conservative or an aggressive investor?

Answer:

The "correct" answer is the aggressive investor. In reality even

a conservative investor might own a small portion of a highly

leveraged company, so long as the investor diversifies his

holdings across many corporations. But in this basic question

we are just trying to get the student to understand that—other

things equal—more leverage tends to magnify potential gains

and potential losses.

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https://www.jobilize.com/capitalism-the-market-economy-by-dr-robert-murphy-mises

Capitalism: The Market Economy

Access: Public Peer Review

Dr.Robert MurphyAssociated Scholar

Mises Institute

USA

Attribution: Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY

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