Question $8$

Which of the following statements is CORRECT?

Other things held constant, the more debt a firm uses, the higher its operating margin will be$.$

Debt management ratios show the extent to which a firm's managers are attempting to magnify returns on owners'

capital through the use of financial leverage.

Other things held constant, the more debt a firm uses, the higher its profit margin will be$.$

Other things held constant, the figher a firm's total debt to total capital ratio, the higher its TIE ratio will be$.$

Debt management ratios show the extent to which a firm's managers are attempting to reduce risk through the use of

financial leverage. The higher the total debt to total capital ratio, the lower the risk.

Question $9$

Your bank account pays a $6\%$ nominal rate of interest. The interest is compounded quarterly. Which of the following

statements is CORRECT?