A Firm Has ROE of 18

question 72

Multiple Choice

A firm has ROE of 18.5%,net profit margin of 3.2% and an asset turnover ratio of 0.7.What is the firm's equity multiplier?

• A)4.0
• B)8.3
• C)13.0
• D)4.6
• E)5.8

---

Definitions:

Equity Investments

Investments in stocks or shares, representing ownership in a company or entity and participation in its profits.

Risk Free Rate

The rate of return on an investment with no risk of financial loss, typically represented by the yield on government bonds.

Market Premium

The additional return an investor expects to receive from a market portfolio compared to the risk-free rate.

Equity Investments

Financial investments in shares of companies, giving the holder ownership interest in the company.