Which of the Following Statements Is CORRECT

question 40

Multiple Choice

Which of the following statements is CORRECT?

• A) Electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries.
• B) Drug companies (prescription, not illegal!) generally have high debt-to-equity ratios because their earnings are very stable and, thus, they can cover the high interest costs associated with high debt levels.
• C) 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.
• D) Since most stocks sell at or very close to their book values, book value capital structures are almost always adequate for use in estimating firms' costs of capital.
• E) Generally, debt-to-total-assets ratios do not vary much among different industries, although they do vary among firms within a given industry.

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Definitions:

Dimensional Approach

A method of understanding psychiatric disorders that conceptualizes them on a continuum rather than as distinct categories, assessing the degree to which symptoms are present.

Mental Disorders

Conditions that affect a person’s thinking, feeling, behavior, or mood, significantly impacting their ability to relate to others and function each day.

Continuum

A continuous sequence in which adjacent elements are not perceptibly different from each other, but the extremes are quite distinct.

Discrete Classification

A classification approach that categorizes entities based on clear, distinct boundaries, without overlap between categories.