Elyse Wants to Calculate Her Return on Equity but Has

question 84

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 profits divided by total owner's equity.
• B) total owner's equity divided by net profits.
• C) total assets divided by total owner's equity.
• D) total owner's equity divided by total assets.

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Definitions:

Mutual Funds

Investment funds that pool money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.

Hedge Funds

Private investment funds that use a range of strategies to achieve returns, including diversification, leveraging, and derivatives.

Treynor Measure

A performance metric for determining how well an investment portfolio compensates the investor for taking risk, relative to the market as a whole.

Standard Deviation

A statistic that measures the dispersion or variation of a set of values from its mean, indicating how spread out the values are.