Which of the Following Statements Is Correct

question 70

Multiple Choice

Which of the following statements is correct?

• A)The use of debt financing will tend to lower the basic earning power ratio, other things held constant.
• B)A firm that employs financial leverage will have a higher equity multiplier than an otherwise identical firm that has no debt in its capital structure.
• C)If two firms have identical sales, interest rates paid, operating costs, and assets, but differ in the way they are financed, the firm with less debt will generally have the higher expected ROE.
• D)Holding bonds is better than holding stock for investors because income from bonds is taxed on a more favourable basis than income from stock.

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Definitions:

Metacognitive Strategy

Metacognitive Strategy involves the methods used to plan, monitor, and assess one’s own understanding and performance, such as planning how to approach a learning task and evaluating progress.

Advance Organizer

A pedagogical technique that involves presenting an overview or framework before learning to guide students' understanding.

Bloom's Taxonomy

A hierarchical classification of educational objectives and learning outcomes, ranging from simple knowledge to complex evaluation and creation skills.

Synthesize

Synthesize involves combining various elements or concepts into a coherent whole, especially in the context of creating a new understanding or interpretation from different sources of information.