Companies HD and LD have identical amounts of assets, investor-supplied capital, operating income (EBIT), tax rates, and business risk. Company HD, however, has a higher debt ratio than LD. Company HD's return on investors' capital (ROIC) exceeds its after-tax cost of debt, rd(1 - T). Which of the following statements is CORRECT?
A. Company HD has a higher return on assets (ROA) than Company LD.
B. Company HD has a higher times interest earned (TIE) ratio than Company LD.
C. Company HD has a higher return on equity (ROE) than Company LD, and its risk as measured by the standard deviation of ROE is also higher than LD's.
D. The two companies have the same ROE.
E. Company HD's ROE would be higher if it had no debt.
Answer: C
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Give three examples of probing questions that could be asked by someone selling new cars. Students' answers will vary based on their creativity. Examples include "What kind of car do you picture yourself driving?" "How do you plan to use the car?" "What kind of sacrifices are you willing to make so that your car will not add to pollution problems?" "What kinds of cars do your family and friends drive?" "What made you think you might want to own this model of car?"
What will be an ideal response?
The difference between budgeted variable overhead for actual hours and standard overhead is the __________________________________________________
Fill in the blank(s) with correct word
Kevin goes to the store to purchase a fully-automatic washing machine. He browses through several models of washing machines, but does not let the salesperson know that he wants a fully-automatic model While signing the sales contract, he does not notice that the model he is purchasing is a semi-automatic machine. After purchase, which of the following options does Kyle have?
A) Exchange the machine with a fully-automatic one and sue the store if its does not accept it. B) Demand a full cash refund from the store for fraud in concealment. C) Sue the store for its innocent misrepresentation. D) Keep the semi-automatic washing machine as he made a unilateral mistake.
Explain the requirement for a holder in due course (HDC) under the Uniform Commercial Code (UCC) that there be no evidence of forgery, alteration, or irregularity with respect to a negotiable instrument
What will be an ideal response?