Question $1$

$4pts$

You want to lend money to a small business in your town as an

investment. You have $5$ businesses that you are considering.

Which of the following presents the lowest risk to you the lender?

A firm with a debt$-$equity ratio of $3$ and an interest coverage ratio of $5.$

A firm with a debt$-$equity ratio of $\mathrm{.}7$ and an interest coverage ratio of $4.$

A firm with a debt$-$equity ratio of $5$ and an interest coverage ratio of $3.$

A firm with a debt$-$equity ratio of $\mathrm{.}7$ and an interest coverage ratio of $2.$

A firm with a debt$-$equity ratio of $2$ and an interest coverage ratio of $\mathrm{.}7$