1. When would the "return on equity" equal the "return on assets?"

A. Whenever the total debt ratio is positive

B. Whenever a firm has positive net worth

C. Whenever the firm has positive net worth and positive net income

D. Whenever the equity multiplier ratio is one

2. A bond's ____________ is found by dividing the bond's coupon payment by its closing price.

A. current yield

B. investors' required rate of return

C. coupon rate

D. cost of capital

E. cost of debt

3. For which item is the balance sheet value likely to be closest to the item's market value at the time the balance sheet is prepared?

A. Net plant and equipment

B. Common stock and paid-in surplus

C. Inventory

D. Cash

E. Retained earnings