The Highest Possible Value for the Interest-Burden Ratio Is ________

question 60

Multiple Choice

The highest possible value for the interest-burden ratio is ________, and this occurs when the firm ________.

• A) 0; uses as much debt as possible
• B) 1; uses debt to the point where ROA = interest cost of debt
• C) 1; uses no interest-bearing debt
• D) -1; pays down its existing debts

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Definitions:

Self-Esteem Matters

The importance of how much value people place on themselves and how this affects their behavior and well-being.

Mortality

The state or condition of being subject to death; often used to refer to the death rate in a population.

Psychological Well-being

A state of comfort, health, or happiness in an individual's psychological functioning.

Delay Gratification

The ability to resist the temptation for an immediate reward and wait for a later reward, often considered a sign of emotional intelligence and self-control.