The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.

Question

Quizplus · Accepted Answer

The rate earned on total common stockholders' equity is generally higher than the rate earned on total assets, as the common stockholders' equity represents the residual claim on the assets after deducting liabilities. Therefore, common stockholders' equity represents a higher risk and potential reward for investors.

The Rate Earned on Total Common Stockholders' Equity for Most