Which One of the Following Is a Correct Formula for Computing

question 12

Multiple Choice

Which one of the following is a correct formula for computing the return on equity? 

• A) Profit margin × ROA
• B) ROA × Equity multiplier
• C) Profit margin × Total asset turnover × Debt-equity ratio
• D) Net income/Total assets
• E) Debt-equity ratio × ROA

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Definitions:

Time To Expiration

The remaining period until an option contract or other derivative expires, after which it becomes worthless.

Stock Price

The cost of purchasing a share of a company, determined by the supply and demand in the stock market.

Time Value

The concept in finance that money available now is worth more than the same amount in the future due to its potential earning capacity.

In-The-Money

A term describing an options contract that has intrinsic value; for a call, when the underlying asset's price is above the strike price, and for a put, when it's below.