BUS 5440 Midterm Exam with Answers.Your test grade is 95% The professor has configured this test to allow students to: Show Questions Answered Correctly Show Questions Answered Incorrectly Show Al... l Responses Selected By Student Show What The Correct Response Should Be QUESTION: 1 [QUESTION BANK ID: 269361] TYPE: MULTIPLE CHOICE CORRECT Dan is a chemist for ABC, a major drug manufacturer. Dan cannot earn excess profits on ABC stock based on the knowledge he has related to his experiments if the financial markets are A Weak form efficient B Strong form efficient C Semi strong form efficient D Efficient at any level E Aware that the trader is an insider QUESTION: 2 [QUESTION BANK ID: 269494] TYPE: MULTIPLE CHOICE CORRECT Which of the following statements is correct? A Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%. Under these conditions, the ROE will increase. B Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%. Without additional information, we cannot tell what will happen to the ROE C The modified Du Pont equation provides information about how operations affect the ROE, but the equation does not include the effects of debt on the ROE D Other things held constant, an increase in the debt ratio will result in an increase in the profit margin on sales E Suppose a firm’s total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10%, and its debt increases from 40% of total assets to 60%. Under these conditions, the ROE will decrease [Show More]
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