If a Company's Return on Assets Is Substantially Higher Than

question 10

True/False

If a company's return on assets is substantially higher than its cost of borrowing,then the common stockholders would normally want the company to have a relatively high debt/equity ratio.

---

Definitions:

Homeostasis

is the process by which living organisms regulate their internal environment to maintain stable, optimal conditions despite external changes.

Drive-Reduction Theory

A theory of motivation suggesting that biological needs create internal states of tension or arousal—called drives—which organisms are motivated to reduce.

Biological Concept

Fundamental ideas or principles that relate to the biological sciences, encompassing a wide range of phenomena from genetic inheritance to evolution.

Arousal Theory

A theory of motivation suggesting that people are motivated to maintain an optimal level of alertness and physical and mental activation.