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Subject:  Re: Dumb Question Date:  1/30/2003  9:13 PM
Author:  MadCapitalist Number:  1615 of 1942

2) Company takes on more debt. Again, equity is reduced, but income growth won't decline as a result of having more debt. So again, the leverage provides an added boost to ROE.

Adding debt doesn't reduce equity. It boosts ROE by increasing net income without adding equity capital to do it.
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