What Is the Return on Equity for a Firm with a Return

question 102

Multiple Choice

What is the return on equity for a firm with a return on assets of 15%,a return on debt of 10%,and a 0.75 debt-equity ratio?

• A) 18.75%
• B) 20.00%
• C) 23.75%
• D) 26.25%

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Definitions:

Budget Deficit

A financial situation where a government's expenditures exceed its revenues over a specified period, leading to borrowing or debt accumulation.

National Debt

National Debt is the total amount of money owed by a country's government to creditors, which can result from borrowing to cover budget deficits.

Economy's Production

The total value of all goods and services produced by an economy over a specific period, reflecting its productive capacity.

Crowding Out

A situation in economics where increased government spending reduces private sector investment or spending due to higher interest rates.