Question 1: Venture Corporations total assets are 3 times greater than total equity; total equity is 50% of total liabilities. The total debt to total assets ratio is
A) .67
B) .75
C) .87
D) cannot be determined with the information given.
Question 2: Which of the following statements is most correct?
A) If two companies have the same ROE and the same risk they must have the same residual income (abnormal earnings) for the year
B) If two companies have the same net book value and the same residual income this year, then their stock prices must be the same
C) If two companies have the same ROE and the same stock price their earnings must be the same for the year
D) If two companies have the same ROE, net book value, and cost of capital then their residual income must be the same for the year