A Bank Has a Return on Assets of 2 Percent

question 2

Multiple Choice

A bank has a return on assets of 2 percent, $40 million in assets, and $4 million in equity. What is the return on equity?

• A) 10 percent
• B) .2 percent
• C) 2 percent
• D) 20 percent
• E) none of the above

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Definitions:

Unqualified Opinion

An auditor's report that the financial statements of an entity present fairly its affairs in all material respects according to the applicable financial reporting framework.

CPA

Certified Public Accountant, a professional designation given to accountants who pass a licensing examination in accounting.

GAAP

Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards for financial reporting in the United States.

Trigonometry

A branch of mathematics dealing with the relationships between the angles and sides of triangles, extensively used in engineering, physics, and astronomy.