Which of the Following Firms Would Be Expected to Have

question 74

Multiple Choice

Which of the following firms would be expected to have a high ROE based on that firm's high profitability?

• A)a medical supply company that provides very precise instruments at a high price to large medical establishments such as hospitals
• B)a low-end retailer that has a low mark-up on all items it sells
• C)a brokerage firm that has high levels of leverage
• D)a grocery store chain that has very high turnover,selling many multiples of its assets per year
• E)a mining firm that is mostly engaged in exploration for new deposits

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Definitions:

Corporate Opportunity

A business opportunity or prospect that a company has the right to pursue, typically relevant in conflicts of interest situations.

Doctrine

A set of beliefs, policy, or position, often held by organizations, governments, or religious groups.

Prospectus

An official document issued by companies that are offering securities for sale to the public, detailing the investment’s objectives, risks, and financial statements.

Securities

Financial instruments that represent an ownership position, a creditor relationship, or rights to ownership, such as stocks, bonds, and options.