Two operationally similar companies, HD and LD, have identical amounts of assets, operating income (EBIT), tax rates, and business risk. Company HD, however, has a much higher debt ratio than LD. Company HD's return on invested capital (ROIC) exceeds its after-tax cost of debt, (1-T) r d. 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.

The east asiatic company (eac), a danish company with subsidiaries throughout asia, has been funding its bangkok subsidiary primarily with u.s. dollar debt because of the cost and availability of dollar capital as opposed to thai baht-denominated (b) debt. the treasurer of eac-thailand is considering a 1-year bank loan for $247,000.the current spot rate is b32.03 /$, and the dollar-based interest is 6.78% for the 1-year period. 1-year loans are 12.04% in baht.a. assuming expected inflation rates of 4.3 % and 1.24% in thailand and the united states, respectively, for the coming year, according to purchase power parity, what would the effective cost of funds be in thai baht terms? b. if eac's foreign exchange advisers believe strongly that the thai government wants to push the value of the baht down against the dollar by5% over the coming year (to promote its export competitiveness in dollar markets), what might the effective cost of funds end up being in baht terms? c. if eac could borrow thai baht at 13% per annum, would this be cheaper than either part (a) or part (b) above?

Which of the following best explains why buying a house is more beneficial than renting? a. buying is a personal investment while renting involves giving money to the landlord. b. the monthly payments on a mortgage are generally lower than rent on an apartment. c. it's easier to sell a house than it is to get a landlord to break a rental agreement. d. housing prices can go up and down quickly in comparison to the level of rents.

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