Firm X has generated average annual profits of £Y>0 over the last 10 years. In the same period, the firm has not paid any dividend (all earnings have been retained) and its debt has been constant at £D>0. The firm’s business model and its market environment have also stayed roughly the same during the 10 year period. This implies that： X’s debt to equity ratio is the same as it was 10 years ago The beta of firm X’s larger than it was 10 years ago The beta of firm X’s equity is the same as it was 10 years ago The beta of firm X’s equity is smaller than it was 10 years
Firm X has generated average annual profits of £Y>0 over the last 10 years. In the same period, the firm has not paid any dividend (all earnings have been retained) and its debt has been constant at £D>0. The firm’s business model and its market environment have also stayed roughly the same during the 10 year period. This implies that： X’s debt to equity ratio is the same as it was 10 years ago The beta of firm X’s larger than it was 10 years ago The beta of firm X’s equity is the same as it was 10 years ago The beta of firm X’s equity is smaller than it was 10 years
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Firm X has generated average annual profits of £Y>0 over the last 10 years. In the same period, the firm has not paid any dividend (all earnings have been retained) and its debt has been constant at £D>0. The firm’s business model and its
- X’s debt to equity ratio is the same as it was 10 years ago
- The beta of firm X’s larger than it was 10 years ago
- The beta of firm X’s equity is the same as it was 10 years ago
- The beta of firm X’s equity is smaller than it was 10 years ago
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