Return on assets = 5.5%, Total assets $3,000 and common equity $1,050 then return on equity would be_________?
Correct answer: B. 15.71%
- A. $22,275
- B. 15.71%
- C. 1.93%
- D. 1.925 times
Explanation
Return on assets gives income of $3,000 × 5.5% = $165; dividing this by common equity of $1,050 gives ROE of 15.71%. Thus the relevant option is the percentage, not the dollar amount or ratio written as times.
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