Which of the Following Choices Would Be Guaranteed to Increase

question 26

Multiple Choice

Which of the following choices would be guaranteed to increase a firm's ROE if the ROA is currently 10 percent and the leverage ratio equals 1.0?

• A)Increase the leverage ratio
• B)Increase the debt burden from its current level
• C)Decrease assets from the current level
• D)Decrease the debt burden from its current level

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Definitions:

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity of goods demanded, leading to market stability.

Positive Externality

A benefit enjoyed by a third-party as a result of an economic transaction they are not directly involved in.

Equilibrium Quantity

The amount of products or services available that matches the amount sought after at the price where supply meets demand.

Socially Optimal

A condition in which resources are allocated in the most efficient way from the perspective of society as a whole.