Frederico's Has a Profit Margin of 5%,a Return on Assets

question 67

Multiple Choice

Frederico's has a profit margin of 5%,a return on assets of 9%,and an equity multiplier of 1.5.What is the return on equity?

• A)6.7%
• B)8.4%
• C)11.2%
• D)13.5%
• E)19.6%

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Definitions:

Foreign Exchange Gain

A gain resulting from changes in exchange rates between currencies, affecting the value of foreign currency-denominated assets or liabilities.

Consolidated Income Statement

A consolidated income statement presents the financial performance of a parent company and its subsidiaries as one combined entity.

Forward Exchange Contract

A financial agreement between parties to exchange currencies at a predetermined future date and rate.

Annual Interest Rate

The percentage of interest that will be earned or paid on investments or loans over a one-year period.