The ROE Ratio Measures

question 115

Multiple Choice

The ROE ratio measures:

• A) the return stockholders receive in dividends for each dollar of their investment.
• B) the return stockholders receive in dividends and stock price growth for each dollar of their investment.
• C) the amount earned by the company on each dollar contributed by stockholders and earnings reinvested in the company.
• D) the amount earned by the company on each dollar obtained from equity and debt financing.

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Definitions:

Transaction Date

When control of the future economic benefits embodied in an asset are obtained from or transferred to another entity.

Exchange Rate

The price at which one currency can be exchanged for another currency.

Credit Terms

Conditions under which credit is extended by a lender to a borrower, including the repayment period and interest rate.

Direct Quotation

A currency quotation method where the local currency is fixed, and the foreign currency varies.