What Is the Return on Stockholders' Equity for a Firm

question 126

Multiple Choice

What is the return on stockholders' equity for a firm with a return on sales of 5.2 percent, sales of $620,000, an equity multiplier of 1.8, and total assets of $380,000?

• A) 8.48%
• B) 5.74%
• C) 15.27%
• D) 9.36%

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Definitions:

Budget Constraint

The limitations on the consumption bundles that a consumer can afford given their income and the prices of goods.

Consumption Possibilities

The set of all consumption bundles that can be consumed given a consumer’s income and prevailing prices.

Budget Line

A graphical representation of all possible combinations of two goods that an individual can afford given their income and the prices of the goods.

Giffin Good

A type of good for which demand increases as its price increases, contrary to the typical law of demand.