Which of the Following Combinations of Stocks Would Give You

question 44

Multiple Choice

Which of the following combinations of stocks would give you the biggest reduction in risk?

• A)Duke Energy and Wal-Mart
• B)Wal-Mart and Microsoft
• C)Microsoft and Duke Energy
• D)Duke Energy by itself
• E)Wal-Mart by itself

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Definitions:

Debt-to-Equity Ratio

A financial metric that shows the comparative ratio of equity to debt employed to fund a company's assets.

Return on Equity

A measure of a corporation's profitability, calculated as net income divided by shareholders' equity, indicating how effectively equity is being used.

Return on Assets

A measurement of profitability indicating how efficiently a company uses its assets to generate earnings.

Return on Debt

A measure of a company's profitability based on its total debt, indicating how effectively a company uses its borrowing.