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%

Question

Quizplus · Accepted Answer

The return on equity (ROE) can be calculated using the formula ROE = Return on Assets (ROA) * Equity Multiplier. Given an ROA of 1.1% and an Equity Multiplier of 12, the calculation is 1.1% * 12 = 13.2%.

What Is the Return on Equity for a Bank That