Which of the Following Is Correct

question 125

Multiple Choice

Which of the following is correct?

• A)The variation in ROE and EPS for an unleveraged firm is identical to variation in EBIT.
• B)In a leveraged firm, the variation in ROE and EPS is always greater than the variation in EBIT.
• C)Financial risk is the additional variation in ROE and EPS arising from the use of debt.
• D)All of the above

---

Definitions:

Quantity and Quality

Refers to the amount and the standard of a product or service, indicating its overall value or suitability.

Coincidence of Wants

A situation in a barter system where two parties each have something the other wants, facilitating an exchange without the need for money.

Total Output

The total quantity of goods and services produced by an economy, sector, or individual producer over a specified period.

Coincidence-of-Wants Problem

Refers to the difficulty in barter transactions where each party needs to have what the other wants and be willing to trade for it simultaneously.