Companies HD and LD Have the Same Total Assets,total Investor-Supplied

Multiple Choice

Companies HD and LD have the same total assets,total investor-supplied capital,operating income (EBIT) ,tax rate,and business risk.Company HD,however,has a much higher debt ratio than LD.Also,both companies' returns on investors' capital (ROIC) exceed their after-tax costs of debt,r_d(1 - T) .Which of the following statements is CORRECT?

A) HD should have a higher return on assets (ROA) than LD.
B) HD should have a higher times interest earned (TIE) ratio than LD.
C) HD should have a higher return on equity (ROE) than LD,but its risk,as measured by the standard deviation of ROE,should also be higher than LD's.
D) Given that ROIC > r_d(1 - T) ,HD's stock price must exceed that of LD.
E) Given that ROIC > r_d(1 - T) ,LD's stock price must exceed that of HD.