Two Operationally Similar Companies,HD and LD,have the Same Total Assets,operating

Two operationally similar companies,HD and LD,have the same total assets,operating income (EBIT) ,tax rate,and business risk.Company HD,however,has a much higher debt ratio than LD.Also HD's basic earning power (BEP) exceeds its cost of debt (r_d) .Which of the following statements is CORRECT?

A) HD should have a higher times interest earned (TIE) ratio than LD.
B) HD should have a higher return on equity (ROE) than LD, but its risk, as measured by the standard deviation of ROE, should also be higher than LD's.
C) Given that BEP > r_d, HD's stock price must exceed that of LD.
D) Given that BEP > r_d, LD's stock price must exceed that of HD.
E) HD should have a higher return on assets (ROA) than LD.

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