If ROC Is Less Than a Firm's Cost of Capital

question 87

Multiple Choice

If ROC is less than a firm's cost of capital, which of the following must be true?

• A)the firm's EVA is positive.
• B)the firm's EVA is negative.
• C)the firm's ROE is equal to zero.
• D)the firm's ROE is negative.

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Definitions:

Developmental Trends

Patterns and sequences of development observed over time, which can include physical, cognitive, and social changes.

Causality

The relationship between cause and effect, where one event (the cause) is understood to lead to another event (the effect) as a result.

Longitudinal Studies

Research designed to observe the same subjects over a period of time, allowing for the study of changes and developments.

Cross-Sectional Studies

Research designs in which subjects of different ages are studied at one point in time.