If a Venture Has a Return on Assets ROA) =

question 3

Multiple Choice

If a venture has a return on assets ROA) = 12%, an equity multiplier based on beginning equity = 3.0 times, and a sustainable growth rate of 18%, the retention rate would be:

• A) 10%
• B) 20%
• C) 30%
• D) 40%
• E) 50%

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Definitions:

Put Premium

The price that an investor pays for the right but not the obligation to sell a specified amount of an underlying asset at a predetermined price within a specified time frame.

Long Straddle

An options trading strategy that involves purchasing both a call and a put option on the same asset with the same expiration date and strike price, betting on volatility.

Call Contract

A financial derivative agreement giving the buyer the right, but not the obligation, to buy an underlying asset at a specified price before a specified date.

Break Even

The point at which total cost and total revenue are equal, meaning there is no net loss or gain.