Two Companies, a and B, Have the Same ROEs, but Company

question 38

Multiple Choice

Two companies, A and B, have the same ROEs, but Company A has a higher residual income. Which of the following would explain this, all else equal?

• A)Company A is riskier than CompanyB.
• B)Company A has higher expected future growth.
• C)Company A has greater net book value.
• D)Company A has lower ROA.

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Definitions:

Offer Letter

A written document extended by an employer to a job candidate formalizing the terms of employment being offered.

Incentives

Rewards or benefits offered to motivate or encourage specific actions or behaviors from individuals or groups.

Interviewer

A person who asks questions to evaluate the qualifications or opinions of an interviewee.

Interview Strategy

A planned approach for presenting oneself effectively during an interview, including thorough preparation, and techniques for answering questions.