QUESTION 36 The debt-to-equity ratios for Firm 1, Firm 2, Firm 3, and Firm 4 are 0.2,0.3,0.35, and 0.4, respectively. The carnings per share for Firm 1, Firm 2, Firm 3, and Firm 4 are $4, $3, $2.5, and $2, respectively. Everything else equal, which firm is placing more burdens on its borrowing? A) Firm 1 B) Firm 2 C) Firm 3 D) Firm 4
QUESTION 36 The debt-to-equity ratios for Firm 1, Firm 2, Firm 3, and Firm 4 are 0.2,0.3,0.35, and 0.4, respectively. The carnings per share for Firm 1, Firm 2, Firm 3, and Firm 4 are $4, $3, $2.5, and $2, respectively. Everything else equal, which firm is placing more burdens on its borrowing? A) Firm 1 B) Firm 2 C) Firm 3 D) Firm 4
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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36

Transcribed Image Text:QUESTION 36
The debt-to-equity ratios for Firm 1, Firm 2, Firm 3, and Firm 4 are 0.2, 0.3,0.35, and 0.4, respectively. The earnings per share for Firm 1, Firm 2, Firm 3, and
Firm 4 are S4, $3, S2.5, and $2, respectively. Everything clse equal, which firm is placing more burdens on its borrowing?
A) Firm 1
B) Firm 2
C) Firm 3
D) Firm 4
A
D.
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