Which of the Following Is Correct

question 14

Multiple Choice

Which of the following is correct?

• A) Generally,debt to total assets ratios do not vary much among different industries although they do vary for firms within a particular industry.
• B) Utilities generally have very high common equity ratios due to their need for vast amounts of equity supported capital.
• C) The drug industry has a high debt to common equity ratio because their earnings are very stable and thus,can support the large interest costs associated with higher debt levels.
• D) Wide variations in capital structures exist between industries and also between individual firms within industries and are influenced by unique firm factors including managerial attitudes.
• E) Since most stocks sell at or around their book values,using accounting values provides an accurate picture of a firm's capital structure.

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Definitions:

Allocative Efficiency

an optimal distribution of resources in an economy, ensuring that goods and services are distributed according to consumer preferences.

Per-Capita Output

The average production of goods or services per person within a geographical area or country.

Developing Countries

Nations with a lower living standard, underdeveloped industrial base, and low Human Development Index (HDI) relative to other countries.

Modernize Economies

The process of adopting new technologies, implementing policy reforms, and updating infrastructures to improve a country's economic performance and productivity.