Which of the Following Statements Is CORRECT

question 74

Multiple Choice

Which of the following statements is CORRECT?

• A) Generally,debt ratios do not vary much among different industries,although they do vary among firms within a given industry.
• B) Electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries.
• C) Airline companies tend to have very volatile earnings,and as a result they generally have high target debt-to-equity ratios.
• D) Wide variations in capital structures exist both between industries and among individual firms within given industries.These differences are caused by differing business risks and also managerial attitudes.
• E) Since most stocks sell at or very close to their book values,book value capital structures are typically adequate for use in estimating firms' weighted average costs of capital.

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