If the Interest Rate on Debt Is Lower Than ROA

question 33

Multiple Choice

If the interest rate on debt is lower than ROA, then a firm will __________ by increasing the use of debt in the capital structurE.

• A) increase the ROE
• B) not change the ROE
• C) decrease the ROE
• D) change the ROE in an indeterminable manner

---

Definitions:

Molecule

The smallest unit of a chemical compound that can exist, consisting of two or more atoms bonded together.

Hemoglobin

A protein in red blood cells responsible for transporting oxygen from the lungs to the rest of the body.

Mutation

A change in the DNA sequence within an organism's gene or chromosome, leading to diversity within species and populations.

Gene

A segment of DNA that serves as a unit of hereditary information; includes a transcribable DNA sequence (plus associated sequences regulating its transcription) that yields a protein or RNA product with a specific function.