Return on Equity Increases When the Expected Rate of Return

question 227

True/False

Return on equity increases when the expected rate of return from the acquired assets is higher than the interest rate on the debt issued to finance the acquired assets.

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Definitions:

Johnson's Rule

A scheduling rule that minimizes idle time and enhances job sequencing efficiency in a manufacturing process.

Alpha

In statistics, alpha refers to the significance level used to reject the null hypothesis, often set at 0.05 or 5% risk. In finance, it represents the excess return on an investment relative to the return of a benchmark index.

Beta

A measure of the volatility or systemic risk of a security or a portfolio compared to the market as a whole.

Finite Capacity Scheduling

A method used in manufacturing to allocate plant and machinery resources effectively, planning production to meet demand within a finite or limited capacity.