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A Firm Has an ROE of -2%, a Debt/equity Ratio

Question 64

Multiple Choice

A firm has an ROE of -2%, a debt/equity ratio of 1.0, a tax rate of 0%, and an interest rate on debt of 10%.The firm's ROA is

A) 2%.
B) 4%.
C) 6%.
D) 8%.
E) None of the options

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