3- The total interest expense is 37% of the Net Interest Income that is $1,260,000 and the adjusted operating income is $980,000. The profit margin is 12.61% and the asset utilization ratio is 62% and the capitalization ratio is 58%. Then by how much does ROE exceed ROA if the average earning assets are 60% from the total assets? * a- 5.78% b- 6.45% C-5.66% d- 6.86% e- None of the above

3- The total interest expense is 37% of the Net Interest Income that is $1,260,000 and the adjusted operating income is $980,000. The profit margin is 12.61% and the asset utilization ratio is 62% and the capitalization ratio is 58%. Then by how much does ROE exceed ROA if the average earning assets are 60% from the total assets? * a- 5.78% b- 6.45% C-5.66% d- 6.86% e- None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A return on assets of 5.15% means that a company is earning: O a. a $5.15 return on every $100 of assets minus liabilities. O b. a $5.15 return on every $100 of total assets. O c. a $5.15 return on every $100 of current assets. O d. a $5.15 return on every $100 invested in long-term assets.
Two capital assets display the following: E(RA) = 12% σA = 1.5% E(RB) = 15% σB = 1.0% If asset A´s return is 5% below the Capital Market Line (CML), and asset B´s return is 1% below the CML, what is the equation of the CML? a) E(Ri) = 0.1203 − 0.02σi b) E(Ri) = 0.09 + 2σi c) E(Ri) = 0.1227 + 0.02σi d) E(Ri) = 0.15 − 2σi e) E(Ri) = 0.14 + 2σi
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