The modified DuPont formula relates the firm's return on total ...

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The modified DuPont formula relates the firm's return on total assets (ROA) to its ________.
 
  A) return on equity (ROE)
  B) operating leverage multiplier
  C) net profit margin
  D) total asset turnover

Question 2

In comparing the constant-growth model and the capital asset pricing model (CAPM) to calculate the cost of common stock equity, ________.
 
  A) the CAPM ignores risk, while the constant-growth model directly considers risk as reflected in the beta
  B) the CAPM directly considers risk as reflected in the beta, while the constant-growth model uses the market price as a reflection of the expected risk-return preference of investors
  C) the CAPM directly considers risk as reflected in the beta, while the constant growth model uses dividend expectations as a reflection of risk
  D) the CAPM indirectly considers risk as reflected in the market return, while the constant growth model uses dividend expectations as a reflection of risk

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Answer to Question 1

A

Answer to Question 2

B

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