The Board of Directors Is Dissatisfied with Last Year's ROE

question 38

Multiple Choice

The board of directors is dissatisfied with last year's ROE of 15%.If the operating profit margin and asset turnover ratio remain unchanged at 8% and 1.25,respectively,by how much must the leverage ratio (i.e.,assets/equity) increase to achieve 20% ROE?

• A) 0.50%
• B) 5%
• C) 16.67%
• D) 33.33%

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Investors who actively monitor and evaluate their investments and market conditions to protect and grow their assets.

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Reduced rates at which interest is charged on borrowed funds, typically intended to stimulate economic growth by making borrowing cheaper.