The Risk Premium of a Company Would Increase With

question 5

Multiple Choice

The risk premium of a company would increase with:

• A)An increase in earnings.
• B)An increase in the current ratio.
• C)A stable interest coverage ratio.
• D)An increase in the debt to equity ratio.

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Definitions:

Predict

To declare or indicate a likely event or outcome in the future based on current evidence or patterns.

Null Hypothesis

A hypothesis that assumes no significant difference or relationship exists in the population from which a sample is drawn.

Multiple Regression Equation

A statistical technique that models the relationship between a dependent variable and two or more independent variables by fitting a linear equation to observed data.

Regression Coefficients

Regression coefficients are values that quantify the relationship between each independent variable and the dependent variable in a regression model.