The Debt Ratio Is an Indicator of a Company's

question 49

Multiple Choice

The debt ratio is an indicator of a company's:

• A)relationship between current liabilities and current assets.
• B)percentage of assets financed with debt.
• C)relationship between debt and interest expense.
• D)relationship between interest expense and income.

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Definitions:

Interest Rates

The cost of borrowing money or the return on savings, usually expressed as a percentage of the amount borrowed or saved.

Portfolio Beta

A measure of the volatility, or systematic risk, of a portfolio in comparison to the market as a whole, indicating how much the investment’s value is expected to fluctuate.

Expected Return

The weighted average of all possible returns for a given investment, where the weights are the probabilities of each outcome, representing an anticipation of gains on an asset.

Market Risk Premium

The additional return over the risk-free rate that investors require to compensate them for the extra risk of investing in the stock market.