Trends in Ratios That Measure the Relationship Between Debt and Equity

question 38

Multiple Choice

Trends in ratios that measure the relationship between debt and equity provide information about which (if any) of the following?
I. Long term stability
II. Degree of risk in using debt financing
III. Margin of safety to creditors in the event of liquidation

• A) None.
• B) I and II only
• C) II and III only
• D) I, II and III

---

Definitions:

WEBS Portfolios

WEBS Portfolios, originally known as World Equity Benchmark Shares, are exchange-traded funds that track international stock market indexes.

Passively Managed

An investment strategy that involves mimicking the performance of a market index, typically resulting in lower fees and turnover rates compared to active management.

Brokerage Commissions

Brokerage commissions are fees charged by a broker for executing transactions or providing specialized services.

Domestically-Produced Products

Goods that are manufactured or produced within a country's borders, as opposed to being imported from abroad.