Which of the following is true? A. The process of pooling mortgages or other typ

Question

Which of the following is true?

A. The process of pooling mortgages or other types of loans and then selling claims or securities against that pool in a secondary market is called capitalization

B. Corporations may pay taxes depending on their percentage of ownership

C. Capital gains are terated separately from ordinary corporate income for tax purposes

D. Corporations pay taxes on all dividends received from other corporations, no matter their share of ownership

________ ratio measures a firm's ability to pay contractual interest payments.

A. Average payment period

B. Fixed-payment coverage

C. Times Interest earned

D. Debt

A firm with sales of $1,000,000 net profits after taxes of $30,000, total assets of $1,500,000, and common stakeholders' investment $750,000 has a return on equity of _____

A. 3 percent

B. 20 percent

C. 15 percent

D. 4 percent

Explanation / Answer

1. B

2. C (EBIT/Interest expense)

3. D (Net profit/common stakeholders equity)

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