Question: Division A has a higher ROE than Division B, yet Division B creates more value for shareholders and has a higher EVA than Division A.

Division A has a higher ROE than Division B, yet Division B creates more value for shareholders and has a higher EVA than Division A. Both divisions, however, have positive ROEs and EVAs. What could explain these performance measures?

Division A is riskier than Division B.

Division A is much larger (in terms of equity capital employed) than Division B.

Division A has less debt than Division B.

Statements a and b are correct.

All of the statements above are correct.

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