Which of the Following Statements Is True Regarding Debt Ratios

question 70

Multiple Choice

Which of the following statements is true regarding debt ratios?

• A)Firms with relatively low debt ratios have higher expected returns when business is good.
• B)Firms with relatively low debt ratios are exposed to more risk compared to firms with relatively high debt ratios.
• C)Firms with relatively high debt ratios have higher expected returns when business is bad.
• D)Firms with relatively high debt ratios have higher expected returns when business is good.
• E)Firms with relatively low debt ratios have higher expected returns when business is poor.

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Definitions:

Return

The income generated from an investment, or the act of returning goods to the seller for a refund or exchange.

Terms

Conditions and agreements under which something is provided or is to be provided, detailing the rate, quantity, and period.

Perpetual Inventory System

An accounting system that continuously records the quantities and values of inventory on hand and sold, updating records in real-time.

Discount

A reduction from the usual cost of something, often provided to incentivize purchases or payments.