Which of the Following Banks Would Likely Have the Highest

question 34

Multiple Choice

Which of the following banks would likely have the highest return on equity?

• A)high return on assets, high capital ratio
• B)high return on assets, low capital ratio
• C)low return on assets, low capital ratio
• D)low return on assets, high capital ratio

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Definitions:

Linear Marginal Cost

A situation where the additional cost of producing one more unit of output is constant, regardless of the quantity produced.

Sunk Costs

Expenses that have already been incurred and cannot be recovered or refunded.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and insurance.

Explicit Costs

Input costs that require an outlay of money by the firm