Question

QUESTION 19

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

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

6 points   

QUESTION 20

1. The only quantitative measure of a consumer loan applicant's character is their:

   		down payment.
   		home equity.
   		time on the job.
   		credit report.
   		credit card balance.

Answer 1

Question 1

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

Answer

Financing a relatively large proportion of assets with debt.

When we finance the asset at a large manner with the debt then it will leads to increase firms return on equity and will also leads to reduction in return on asset.

Question 2

The only quantitative measure of a consumer loan applicant's character is their,

Answer

Credit report

Credit reports are prepared by credit bureau which is the credit history of the individuals. So this will helps the lenders for identifying the credit worthiness of the customer. It is a quantitative measure which prepared for the purpose of knowing the credit history of individuals.

ThankYou....