If a bank has a leverage ratio of 0.1 and a return on capital of 2%, what is its return on equity? A) 0.2% B) 2.1% C) 5% D) 20%
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- Bank ABC has a Return on Equity (ROE) equal to 24%, an equity/debt ratio equal to 0.05 and an asset utilisation ratio equal to 0.07. From this we know that the profit margin of bank ABC is?Consider a bank with return on assets of .15 or 15%. The equity multiplier for this bank is 1.333. What is the return on equity of this bank?A bank with $10,000 in assets has ROA =2% and ROE - 10%. What is its leverage ratio (TA/Equity)? A 2.5 B 5 C 4 D 1.25
- Suppose an investment bank is buying $50 million in long-term mortgage-backed securities and finances the investment by borrowing 70% and paying for the other 30% out of equity. What is the bank's leverage ratio? a) 0.30 b) 0.13 c) 3/7 d) 3Bank ABC has a Return on Equity (ROE) equal to 22%, a total assets/debt ratio equal to 1.02 and an asset utilisation ratio equal to 0.02. From this we know that the profit margin of bank ABC is:Want to this question answer general Accounting
- (a) A bank has an ROA of 1% and an ROE of 9%. What is the equity multiplier for the bank? (b) A bank has an ROA of 1% and an equity multiplier of 9. What is the ROE for the bank?What happens to ROE for Firm U and Firm L if EBIT falls to $1,600? What happens if EBIT falls to $1,200? What is the after-tax cost of debt? What does this imply about the impact of leverage on risk and return?You have the following information on a company on which to base your calculations and discussion: Cost of equity capital (rE) = 18.55% Cost of debt (rD) = 7.85% Expected market premium (rM –rF) = 8.35% Risk-free rate (rF) = 5.95% Inflation = 0% Corporate tax rate (TC) = 35% Current long-term and target debt-equity ratio (D:E) = 2:5 a. What are the equity beta (bE) and debt beta (bD) of the firm described above?[Hint: Assume that the above costs of capital have been generated by an appropriate equilibrium model.] b. What is the weighted-average cost of capital (WACC) for this firm at the current debt-equity ratio? c. What would the company’s cost of equity capital become if you unlevered the capital structure (i.e. reduced gearing until there is no debt)
