A Firm Has an ROE of −2%, a Debt/equity Ratio

question 32

Multiple Choice

A firm has an ROE of −2%, a debt/equity ratio of 1.0, a tax rate of 0%, and an interest rate on debt of 10%. The firm's ROA is

• A) 2%.
• B) 4%.
• C) 6%.
• D) 8%.
• E) None of the options are correct.

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