Which of the Following Statements Is True About Return on Equity

question 79

Multiple Choice

Which of the following statements is true about return on equity (ROE) ?

• A) It measures the return on common stockholders' investment in the assets of the firm.
• B) The value of the firm's ROE is affected by net income.
• C) The value of the firm's ROE is affected by the amount of financial leverage or debt that the firm uses.
• D) All of these choices are correct.

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Definitions:

Absolute Advantage

The ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the cost at which any other entity produces that good or service.

Comparative Advantage

The capacity of a nation, person, business, or area to generate a product or offer a service with a smaller opportunity cost compared to its rivals.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Alternative Goods

Products or services that can be used in place of each other, offering consumers choices based on price, preference, or availability.