Companies HD and LD Have the Same Total Assets, Operating

question 62

Multiple Choice

Companies HD and LD have the same total assets, operating income Which of the following statements is CORRECT?

• A)HD should have a higher return on assets (ROA) than LD.
• B)HD should have a higher times interest earned (TIE) ratio than LD.
• C)HD should have a higher return on equity (ROE) than LD, but its risk, as measured by the standard deviation of ROE, should also be higher than LD's.
• D)Given that BEP > rd, HD's stock price must exceed that of LD.
• E)Given that BEP > rd, LD's stock price must exceed that of HD.

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Definitions:

Energy

The capacity to perform work or to produce changes within a system, existing in kinetic, potential, thermal, electrical, chemical, nuclear, or other various forms.

Violet

A color at the end of the visible spectrum of light, next to blue, and opposite of yellow.

Blue

A primary color perceived when the retina senses light in the wavelength range of approximately 450–495 nanometers.

Phosphoglyceraldehyde

A three-carbon sugar phosphate molecule that plays an important role in several biochemical pathways, including glycolysis and the Calvin cycle.