If a Firm's Return on Investment (I

question 39

Multiple Choice

If a firm's return on investment (i.e., earnings after taxes divided by total assets) is 7% and the firm has no preferred stock financing, it is ____.

• A) possible that its return on stockholders' equity is 10%
• B) possible that its return on stockholders' equity is 5%
• C) impossible for its debt-to-equity ratio to be 1.0
• D) impossible for its net profit margin to be 7%

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Definitions:

Imports

Goods and services purchased from other countries, bringing them into a country's domestic market.

Clothes Dryers

Household appliances designed for removing moisture from clothing and textiles after they have been washed.

Net Exports

The value calculated by subtracting a country's total value of imports from its total value of exports; positive net exports indicate a trade surplus, while negative net exports indicate a trade deficit.

Import Quota

This is a restriction by a country on the quantity of a good that can be imported, aimed at protecting domestic industries from foreign competition.