X-1 Corp's Total Assets at the End of Last Year

question 85

Multiple Choice

X-1 Corp's total assets at the end of last year were $405,000 and its EBIT was 52,500.What was its basic earning power (BEP) ratio?

• A)11.70%
• B)12.31%
• C)12.96%
• D)13.61%
• E)14.29%

---

Definitions:

Moral Hazard

The situation where one party takes more risks because they know they are protected, typically through insurance or other safety nets, leading to potential loss for the other party.

Financial Crisis

A situation where the value of financial institutions or assets drops rapidly, leading to a loss of confidence in the financial system, possible bank runs, and reduced lending and spending.

Adverse Selection

A market process in which unwanted results occur when buyers and sellers have asymmetric information, typically resulting in high-quality goods or services being driven out of the market.

Insured Drivers

Individuals who have obtained insurance coverage to protect against potential losses or liabilities arising from automobile accidents or incidents.