A property is neutrally geared now with an LTV of 50%. If the investor decides to increase leverage with the same interest rate of loan, which of the following is correct about income ROE (YROE), capital gain ROE (GROE), and total ROE (TotalROE)? Assume the capital gain is positive and ignore tax. a. YROE is unchanged, GROE and TotalROE increase b. YROE, GROE and TotalROE decrease c. YROE and TotalROE decrease, GROE increases d. YROE, GROE and TotalROE increase e. YROE decreases, GROE and TotalROE increase

If the corporate income tax rate becomes 0% then greater leverage ratios will lead to an increase in ROE.Group of answer choicesTrueFalse

An investor buys a property for S2.5 million using 100% equity. In the first yearthe expected NOI is S250,000 and capital improvements & reserves are 5% ofthe property value. What will be the effect on ROE if the investor takes aninterest only loan at 6% to free up some of the equity capital? ROE goes up with a higher leverage O a. O b. ROE goes up first and then goes down with a higher leverageO c. ROE goes down with a higher leverage O d. There is no effect on ROE O e. ROE goes down first and then goes up with a higher leverage

All other things being equal, according to the Du Pont model, if a firm’s Return on Equity (ROE) has been increasing and it’s Leverage has been decreasing, then its Return on Assets (ROA) has been:Group of answer choicesIncreasingDecreasingUnable to determine based on the information givenRemaining the same

If the ROE on a new investment is less than the firm's required rate of return A. the investment increases the firm's value. B. the investment leaves the firm's value unchanged. C. the effect on the firm's value is unpredictable. D. the investment reduces the firm's value.

Higher operating leverage is related to the use of additional __________.common equity financingdebt financingfixed costsvariable costs