Elyse Wants to Calculate Her Return on Equity but Has

question 32

Multiple Choice

Elyse wants to calculate her return on equity but has forgotten the formula.You tell her that return on equity equals

• A)net income divided by owners equity.
• B)owners equity divided by net income.
• C)total assets divided by owners equity.
• D)owners equity divided by total assets.

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Definitions:

Federal Income Tax

The tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Inter Vivos Trust

A legal arrangement where assets are transferred into a trust for the benefit of beneficiaries by the trustor during their lifetime.

Taxable Estate

The total value of an individual's estate that is considered when determining estate taxes, including all assets minus allowable deductions.

Alpha Stock

Typically refers to securities that are expected to outperform the market or their sector, based on investment analysis.