Which statement is incorrect? a. When a company increases its degree of financial leverage, the standard deviation of returns on equity of the a. company rises. b. An increase in the corporate tax rate is likely to encourage a corporation to increase the proportion of debt in its capital structure. c. Generally, firms with a faster growth rate have greater earnings retention ratio. d. A corporation's purchase of its own previously issued shares will generally have a negative impact on its price. none of the above
Which statement is incorrect? a. When a company increases its degree of financial leverage, the standard deviation of returns on equity of the a. company rises. b. An increase in the corporate tax rate is likely to encourage a corporation to increase the proportion of debt in its capital structure. c. Generally, firms with a faster growth rate have greater earnings retention ratio. d. A corporation's purchase of its own previously issued shares will generally have a negative impact on its price. none of the above
Chapter31: Capital Markets
Section: Chapter Questions
Problem 5E
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Which statement is incorrect?
a. When a company increases its degree of financial leverage, the standard deviation of returns on equity of the a. company rises.
b. An increase in the corporate tax rate is likely to encourage a corporation to increase the proportion of debt in its capital structure.
c. Generally, firms with a faster growth rate have greater earnings retention ratio.
d. A corporation's purchase of its own previously issued shares will generally have a negative impact on its price.
none of the above
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