Which One of the Following Changes Will Provide an Increase

question 55

Multiple Choice

Which one of the following changes will provide an increase (if only in the short-run) in a firm's ROE?

• A)a decrease in the profit margin.
• B)an increase in the dividend-payout ratio.
• C)an increase in equity.
• D)an increase in tax rates.

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Definitions:

Venture Capitalist

An investor who provides capital to start-ups or small companies with high growth potential in exchange for equity stakes.

Leveraged Buyout

A financial transaction in which a company is purchased primarily with borrowed funds, often by taking on significant debt.

Venture Capitalist

An investor who provides capital to startup companies or supports small companies that wish to expand but do not have access to equities markets.

Board of Directors

A group of individuals elected to represent shareholders and make key decisions on governance and policy direction for an organization.