When a Company's ROE Is Greater Than Its ROA in a Given

question 40

Multiple Choice

When a company's ROE is greater than its ROA in a given time period, it could be that:

• A)the company was able to borrow at an after tax rate that was less than the rate earned by investing in assets.
• B)the company was able to borrow at an after tax rate that was higher than the rate earned by investing in assets.
• C)the company has no debt.
• D)the level of debt has no impact on the ROA

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