Which of the Following Statements Is CORRECT

question 3

Multiple Choice

Which of the following statements is CORRECT?

• A) All else equal, increasing the debt ratio will increase the ROA.
• B) The use of debt financing will tend to lower the basic earning power ratio, other things held constant.
• C) A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure.
• D) If two firms have identical sales, interest rates paid, operating costs, and assets, but differ in the way they are financed, the firm with less debt will generally have the higher expected ROE.
• E) Holding bonds is better than holding stock for investors because income from bonds is taxed on a more favorable basis than income from stock.

---

Definitions:

GLOBE Researchers

A group of scholars involved in a study aimed at understanding the impact of culture on leadership and organizational practices worldwide.

Cultural Dimensions

Frameworks used to describe the effects of a society's culture on the values of its members, and how these values relate to behavior.

Adler's Leader

A concept in psychology that refers to individuals who are motivated by goals and a sense of purpose, often advocating for social interest and community wellbeing, drawing from Alfred Adler's theories.

Cross-cultural Competencies

The knowledge, skills, and attributes required to effectively operate or interact in different cultural contexts, crucial for global leadership and international relations.