1. Firm A and FirmB have debt-total asset ratio of 25 percent and 15 pecrent and returns on total assets of 8 percent and 13 percent, respectively. What is the return on equity for Firm A and Firm B?
2. What is the name test rule? Does the rule apply to any of the following funds: Small Cap Fund, Value Fund, Europe Fund, or International Fund?
3. A firm has a current ratio of 4.2, while the industry average is 1.2. How will this ratio be viewed by lenders and shareholders?
A. Both will be happy the firm has a lot of liquidity
B. Shareholders will be unhappy, but lenders will be happy
C. Shareholders will be happy, but lenders will be unhappy
D. Both will be unhappy that so much money is tied up in low-return assets