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You observe that a firm's return on equity (ROE) is exactly twice its return on assets (ROA). Which one of the following statements must be

You observe that a firm's return on equity (ROE) is exactly twice its return on assets (ROA). Which one of the following statements must be true regarding this firm?

  • Its equity multiplier must be below the industry average.
  • Its equity multiplier must be equal to 2.0.
  • Its equity multiplier must be greater than 2.0
  • Its total assets turnover must be above the industry average.

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