If the Total Assets of a fiRm Decrease While All

question 316

Multiple Choice

If the total assets of a firm decrease while all other components of ROE remain unchanged, you would expect the firm's:

• A) ROE to increase.
• B) ROA to decrease.
• C) Equity multiplier to increase.
• D) ROE to remain unchanged.
• E) Profit margin to decrease.

---

Definitions:

Binding

A term describing an agreement or contract that is legally enforceable and must be adhered to by all parties involved.

Restrictive Covenant

A clause in a deed or lease that limits what the owner of the property can do with it, often to ensure the property's value or character is maintained.

Clause

A specific provision or section within a contract or legal document that stipulates specific terms, conditions, or obligations.

Public Policy

Principles and standards considered by governments in managing their affairs, aiming to ensure the community's welfare and interests.