Which of the Following Statements Is Correct

question 70

Multiple Choice

Which of the following statements is correct?

• A)The use of debt financing will tend to lower the basic earning power ratio, other things held constant.
• B)A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure.
• C)If two firms have identical sales, interest rates paid, operating costs, and assets, but differ in the way they are financed, the firm with less debt will generally have the higher expected ROE.
• D)Holding bonds is better than holding stock for investors because income from bonds is taxed on a more favourable basis than income from stock.

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Definitions:

Criminal Simulation

In criminal law, the altering or falsifying of art objects, antiques, photos, films, recordings, manuscripts, and/or antiquities with the intent to defraud.

Forgery

The act of fraudulently making or altering a document with the intent to deceive or harm others.

Passing Bad Checks

In criminal law, issuing or transferring a check or other negotiable instrument knowing it will be dishonored and with the intent to defraud.

Defrauding Creditors

The act of intentionally deceiving or hiding assets from creditors to avoid repayment of debts.