Which of the Following Actions Would Likely Increase the Return

question 35

Multiple Choice

Which of the following actions would likely increase the Return on Equity (ROE) ?

• A)An increase in the cost of goods sold
• B)The purchase of treasury stock
• C)Issuing shares of preferred stock
• D)An increase in the income tax rate

---

Definitions:

Compounded Semi-Annually

This is the process where interest is added to the principal sum of a loan or deposit twice a year, resulting in interest being earned on interest from that point on.

Replacement Stream

A series of cash flows intended to replace the benefits of an asset or investment over time.

Payments

Payments refer to the amounts of money transferred from one party to another as compensation for goods or services, or as fulfillment of an obligation.

Compounded Quarterly

The process where interest is added to the principal sum of a loan or deposit four times a year, resulting in a higher amount of interest being accumulated than if compounded less frequently.