Question
Which of the following statements is false? Select one: a.With all-equity companies, the rate of return to shareholders is always equal to the rate of
Which of the following statements is false?
Select one:
a.With all-equity companies, the rate of return to shareholders is always equal to the rate of return on assets.
b.With debt, the rate of return to shareholders is always equal to the rate of return on assets providing the rate of return on assets is equal to the interest rate.
c.If the rate of return on assets is greater than the interest on debt, then leverage results in lower rates of return on equity.
d.If the rate of return on assets is less than the interest rate on debt, then leverage results in lower rates of return on equity.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started