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Companies HD and LD have the same total assets, total investor-supplied capital, operating income (EBIT), tax rate, and business risk. Company HD, however, has a

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Companies HD and LD have the same total assets, total investor-supplied capital, operating income (EBIT), tax rate, and business risk. Company HD, however, has a much higher debt ratio than LD. Also, both companies' returns on investors' capital (ROIC) exceed their after-tax costs of debt, ra 1 - T). Which of the following statements is CORRECT? a. HD should have a higher return an assets (ROA) than LD. O b. Given that ROIC > 1 - T. HO's stock price must exceed that of LD. OCHD should have a higher return on equity (ROE) than LD, but its risk as measured by the standard deviation of ROE, should also be higher than LD'S Od HD should have a higher times interest earned (TIE) ratio than LD. O e. Given that ROIC > ro(1-T), LD's stock price must exceed that of HD

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