Frederico's Has a Profit Margin of 6%,a Return on Assets

question 20

Multiple Choice

Frederico's has a profit margin of 6%,a return on assets of 8%,and an equity multiplier of 1.4. What is the return on equity?

• A) 6.7%
• B) 8.4%
• C) 11.2%
• D) 14.6%
• E) 19.6%

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Definitions:

Market Equilibrium

A situation in a market where the quantity of a good or service supplied matches the quantity demanded, leading to a stable price.

Competitive Industry

A market characterized by a large number of firms competing against each other, leading to product diversity, innovation, and fair prices for consumers.

Market Demand

represents the total demand for a product or service within a market, determined by consumers' willingness and ability to buy at various prices.

Economic Profits

The excess of total revenues over total costs, including both explicit and implicit costs.