Last Year's Return on Equity Was 30

question 3

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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Definitions:

Communism

A political and economic ideology proposing a classless society in which all property is publicly owned and each person works and is paid according to their abilities and needs.

Social Inequality

The existence of unequal opportunities or rewards for different social positions or statuses within a society.

Fertility

The natural capability to produce offspring, often measured by the rate of births in a population or the ability of individuals or couples to conceive.

Late 1950s

Refers to the period towards the end of the decade of the 1950s, a time characterized by significant cultural, political, and technological changes.