1. A firm has a tax burden of 0.7,a leverage ratio of 1.3, an interest burden of 0.8, and a return-on-sales ratio of 8%. The firm generates $2.66 in sales per dollar of assets. What is the firm's ROE?
A. 11.9%
B. 17.0%
C. 6.4%
D. 15.5%
2. If a firm issues debt but issues protective covenants in the loan contract, the debt will probably be issued at a _______ interest rate than similar debt.
A. Significantly higher
B. Slightly higher
C. Equal
D. Lower
E. Either A or B