earnings in the future. ii) Firms are allowed to buy back their own shares for various purposes and may keep the repurchased shares as preferred stocks. iii) The manager of a firm can bias the firms' earnings upward by setting asset useful lives shorter, relative to its peer firms. iv) In the CAPM framework, no reward is needed for the systematic risk, which can be reduced to a small amount through a sensible diversification. v) None of the above. Answer: b) [5 marks] Which of the following statements is correct? Choose only one. i) A key difference between return on assets (ROA) and return on common equity (ROCE) is that ROCE is not affected by the way a firm's real assets are financed, whereas ROA is. ii) A common-size balance sheet typically expresses all line items as a percentage of the book value of equity. iii) Net operating loss carryforwards is a common source of deferred tax liabilities. iv) According to the SEC requirement, all depreciable and amortizable assets are subject to