Which of the Following Statements Is True Regarding Corporate Performance

question 98

Multiple Choice

Which of the following statements is true regarding corporate performance ratios?

• A)A high payout ratio may indicate that a company is retaining earnings for future growth investments.
• B)As a company grows larger, it is easy to sustain a high return on common stockholder's equity.
• C)Return on common stockholder's equity is often higher under bond financing rather than common stock financing.
• D)Low growth rates are characterized by low payout ratios.

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Definitions:

Investment Matured

An investment matured refers to when an investment reaches its due date and the principal amount is returned to the investor along with any final interest payments.

Interest Amount

The sum paid or charged for the use of money or for borrowing money.

Interest Earned

Interest Earned is the amount of interest received over a period on deposits or investments.

Invested Amount

The sum of money placed into an investment vehicle with the expectation of generating a return.