Company PL and company NL are identical except PL has positive financial leverage whereas NL has negative financial leverage. Which of the following are true? You can select more than one. PL’s return on invested capital (ROIC) is more volatile than NL’s ROIC. PL’s return on equity (ROE) is more volatile than NL’s ROE. PL’s ROIC and NL’s ROIC are equally volatile. PL’s ROE and NL’s ROE are equally volatile. PL’s return on invested capital (ROIC) is less volatile than NL’s ROIC. PL’s return on equity (ROE) is less volatile than NL’s ROE
Company PL and company NL are identical except PL has positive financial leverage whereas NL has negative financial leverage. Which of the following are true? You can select more than one. PL’s return on invested capital (ROIC) is more volatile than NL’s ROIC. PL’s return on equity (ROE) is more volatile than NL’s ROE. PL’s ROIC and NL’s ROIC are equally volatile. PL’s ROE and NL’s ROE are equally volatile. PL’s return on invested capital (ROIC) is less volatile than NL’s ROIC. PL’s return on equity (ROE) is less volatile than NL’s ROE
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Company PL and company NL are identical except PL has positive financial leverage whereas NL has negative financial leverage. Which of the following are true? You can select more than one.
PL’s
PL’s
PL’s ROIC and NL’s ROIC are equally volatile.
PL’s ROE and NL’s ROE are equally volatile.
PL’s return on invested capital (ROIC) is less volatile than NL’s ROIC.
PL’s return on equity (ROE) is less volatile than NL’s ROE
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