Which of the Following Statements Is CORRECT

question 11

Multiple Choice

Which of the following statements is CORRECT?

• A) Increasing its use of financial leverage is one way to increase a firm's return on investors' capital (ROIC).
• B) If a firm lowered its fixed costs but increased its variable costs by just enough to hold total costs at the present level of sales constant,this would increase its operating leverage.
• C) The debt ratio that maximizes expected EPS generally exceeds the debt ratio that maximizes share price.
• D) If a company were to issue debt and use the money to repurchase common stock,this would reduce its return on investors' capital (ROIC).(Assume that the repurchase has no impact on the company's operating income. )
• E) If a change in the bankruptcy code made bankruptcy less costly to corporations,this would tend to reduce corporations' debt ratios.

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Definitions:

Reagents

Chemicals or materials introduced into a system to initiate or participate in chemical reactions.

Transformation

A broad term indicating change, in chemistry often referring to the conversion of a compound into another by chemical reaction.

Structure

The arrangement of atoms or molecules in a compound, defining its chemical properties and behavior.

Product

The result of a process or chemical reaction, typically described in the context of what is synthesized or created.