Firms with a Lower ROA and Higher Leverage Will Have

question 50

True/False

Firms with a lower ROA and higher leverage will have a lower ROE than firms with a higher ROA and lower leverage.

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Definitions:

Risk Level

The degree of uncertainty or potential financial loss inherent in an investment decision.

Standard Deviation

An indicator of the degree of spread or diversity within a collection of numbers.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Good Economy

A state of economic health characterized by strong growth, low unemployment, and stable prices.