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Which of the Following Would Cause a Firm's ROE to Be

Question 37

Multiple Choice

Which of the following would cause a firm's ROE to be high, but its ROA to be low?


A) A low gross profit margin but a high net profit margin.
B) Financing a relatively large proportion of assets with equity.
C) Paying very low interest rates on the firm's debts.
D) Leasing a large amount of equipment.
E) Financing a relatively large proportion of assets with debt.

Correct Answer:

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