With Risky Debt and MM II,the Expected Return on Assets

question 66

Multiple Choice

With risky debt and MM II,the expected return on assets _____ as the debt-equity ratio ____.

• A) increases; increases
• B) decreases; increases
• C) increases; decreases
• D) is constant; increases

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Definitions:

Mean

The arithmetic average of a set of numbers, obtained by adding them together and dividing by the count of those numbers.

Correlation Coefficients

Statistical measures that describe the strength and direction of the relationship between two variables.

Relationship

refers to a connection, association, or involvement between two or more individuals, groups, or entities.

Scatterplot

A graphical representation used to display values for two variables for a set of data, showing how much one variable is affected by another.