If a Venture Has a Return on Assets ROA) =

question 3

Multiple Choice

If a venture has a return on assets ROA) = 12%, an equity multiplier based on beginning equity = 3.0 times, and a sustainable growth rate of 18%, the retention rate would be:

• A) 10%
• B) 20%
• C) 30%
• D) 40%
• E) 50%

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Definitions:

Active Approach

A management strategy where decisions are made using discretionary methods to try to outperform the market or a specific benchmark.

Potential GDP

Potential GDP is the maximum possible output an economy can produce with full employment of its resources, without causing inflation.

Actual GDP

The total market value of all goods and services produced within a country in a specific period, measuring the economy's real output without adjustment for inflation.

Self-correcting Forces

Economic mechanisms that naturally work to restore equilibrium in markets without government intervention.