The Highest Possible Value for the Interest-Burden Ratio Is ________

question 60

Multiple Choice

The highest possible value for the interest-burden ratio is ________, and this occurs when the firm ________.

• A) 0; uses as much debt as possible
• B) 1; uses debt to the point where ROA = interest cost of debt
• C) 1; uses no interest-bearing debt
• D) -1; pays down its existing debts

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Definitions:

COC

Combined Oral Contraceptives, a form of birth control pill that contains both estrogen and progestin hormones.

Sarc

A root word used in medical terms to indicate flesh or connective tissue.

Flesh

The soft substance consisting of muscle and fat between the skin and bones of an animal or a human.

Tumor

A growth of cells that occurs abnormally when cell division exceeds normal limits or when cells fail to die at the appropriate time.