Assume Now That the Company Believes That If It Adopts

question 71

Multiple Choice

Assume now that the company believes that if it adopts a restricted policy,its sales will fall by 15% and EBIT will fall by 10%,but its total assets turnover,debt ratio,interest rate,and tax rate will all remain the same.In this situation,what's the difference between the projected ROEs under the restricted and relaxed policies?

• A)2.24%
• B)1.50%
• C)1.00%
• D)0.50%

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Definitions:

Neuroticism

A personality trait characterized by emotional instability, anxiety, moodiness, irritability, and sadness.

Social Dominance Orientation

A personality trait which predicts social and political attitudes, characterized by a preference for hierarchy in social settings and dominance over lower-status groups.

Need for Structured Knowledge

Refers to the requirement for organized and systematically arranged information to make it easily understandable and accessible.

Tolerance for Ambiguity

An individual's ability to remain comfortable and composed when faced with unclear, uncertain, or indefinite situations.