Which of the Following Firms Would Be Expected to Have

question 54

Multiple Choice

Which of the following firms would be expected to have a high ROE based on that firm's high operating efficiency?

• A)a high-end fashion retailer that has a very high mark-up on all items it sells
• B)a grocery store chain that has very high turnover, selling many multiples of their assets per year
• C)a medical supply company that provides very precise instruments at a high price to large medical establishments such as hospitals
• D)a brokerage firm that has high levels of leverage

---

Definitions:

Average Rate

A statistical measure that represents the central or typical value in a set of rates or ratios, often used in financial contexts to describe mean returns or interest rates.

Investment Account

An account that holds securities, cash, and other investments for investment purposes.

Investing

The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Compounded Annually

The process where interest earned in one period is added to the principal sum and then interest in the next period is calculated on the new total.