Last Year's Return on Equity Was 30

question 49

Multiple Choice

Last year's return on equity was 30%.This year the ROE has decreased to 20% even though the firm's earnings equaled last year's earnings.The firm has no preferred stock.What caused the decrease?

• A)equity decreased by 10%.
• B)equity decreased by 50%.
• C)equity increased by 10%.
• D)equity increased by 50%.

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