Which of the Following Statements Is CORRECT

question 73

Multiple Choice

Which of the following statements is CORRECT?

• A) Generally, debt ratios do not vary much among different industries, although they do vary among firms within a given industry.
• B) Electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries.
• C) Airline companies tend to have very volatile earnings, and as a result they generally have high target debt-to-equity ratios.
• D) Wide variations in capital structures exist both between industries and among individual firms within given industries. These differences are caused by differing business risks and also managerial attitudes.
• E) Since most stocks sell at or very close to their book values, book value capital structures are typically adequate for use in estimating firms' weighted average costs of capital.
• Multiple Choice: Problems
• Some of these problems are conceptually difficult, and they are designated as HARD. Others are not conceptually difficult, but they require a good bit of arithmetic. Please take this into account when making up timed tests.

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