What Is the Return on Equity for a Bank That

question 79

Multiple Choice

What is the return on equity for a bank that has an equity multiplier of 12, an interest expense ratio of 5%, and a return on assets of 1.1%?

• A) 5.0%
• B) 13.2%
• C) 8.2%
• D) 26.4%
• E) 0.66%

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Definitions:

Window of Opportunity

A limited period during which a particular condition or combination of conditions creates a favorable situation for action or decision.

Avocations

Activities or hobbies pursued outside one's main occupation, often for enjoyment or fulfillment.

Hobbies

Leisure activities pursued for pleasure and relaxation, not as a main occupation.

Corridor Principle

The corridor principle suggests that when entrepreneurs take action and start a journey, they are able to see and access opportunities that were not visible before starting their venture.