Which of the Following Statements Is CORRECT

question 37

Multiple Choice

Which of the following statements is CORRECT?

• A) electric utilities generally have very high common equity ratios because their revenues are more volatile than those of firms in most other industries.
• B) drug companies (prescription, not illegal!) generally have high debt-to-equity ratios because their earnings are very stable and, thus, they can cover the high interest costs associated with high debt levels.
• C) wide variations in capital structures exist both between industries and among individual firms within given industries. these differences are caused by differing business risks and also managerial attitudes.
• D) since most stocks sell at or very close to their book values, book value capital structures are almost always adequate for use in estimating firms' costs of capital.
• E) generally, debt-to-total-assets ratios do not vary much among different industries, although they do vary among firms within a given industry.

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Definitions:

Relevant Time Period

The specific duration during which certain actions are undertaken or conditions apply, significant for analysis or decisions.

Price Elasticity

An indicator that measures the impact of price change on the demand for a good.

Cannondale Mountain Bike

Cannondale Mountain Bike is a specific type of bicycle designed for off-road cycling, produced by the Cannondale Bicycle Corporation, known for its innovation and quality.

Bicycle

A human-powered, pedal-driven vehicle with two wheels attached to a frame, one behind the other.