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Firm XX financed its assets by 100% equity, while Firm YY financed its assets by 40% debt and 60% equity. If the EBIT of both

Firm XX financed its assets by 100% equity, while Firm YY financed its assets by 40% debt and 60% equity. If the EBIT of both companies is always identical across all economic situations, Firm XX has _____volatility in ROE as compared toFirm Y.

A: Higher

B: Lower

C: Equal

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