Two Companies, a and B, Have the Same ROEs, but Company

question 38

Multiple Choice

Two companies, A and B, have the same ROEs, but Company A has a higher residual income. Which of the following would explain this, all else equal?

• A)Company A is riskier than CompanyB.
• B)Company A has higher expected future growth.
• C)Company A has greater net book value.
• D)Company A has lower ROA.

---

Definitions:

IQ Test

A uniform exam created to assess human intellect and mental capabilities.

Psychological Tests

Standardized measures designed to assess various aspects of a person's behavior, personality, and abilities.

Clinical Settings

Environments or venues where medical and psychological treatment or assessments are provided, including hospitals, clinics, and private practices.

Education

The process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits through various methods such as teaching, training, storytelling, and discussion.