For a Company That Has Both Debt and Equity

question 55

Multiple Choice

For a company that has both debt and equity,

• A) ROE > ROA.
• B) ROE < ROA.
• C) ROE = ROA
• D) None of the above.

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Definitions:

Exculpatory Clause

A contract provision that releases one party from liability or legal consequences of their actions to another party involved.

Release

In legal terms, an agreement where one party frees another from liability, claims, or demands.

Contract of Adhesion

A standard form contract prepared by one party, with little or no opportunity for the other party to negotiate more favorable terms.

Superior Bargaining Position

describes a situation where one party has more negotiating power, often due to resources, information, or strategic advantage, influencing the terms of agreements.