A high equity multiplier can increase ROE and the growth rate of the bank as long...

A high equity multiplier can increase ROE and the growth rate of the bank as long as ROA is:

A) increasing

B)decreasing

C) positive

D) negative

E) none of the above

Expert Solution

jeff jeffy answered 1 year ago

What is the return on equity for a bank that has an equity multiplier of 10,...

What is the return on equity for a bank that has an equity multiplier of 10, an interest expense ratio of 5%, and a return on assets of 2%? 1) 15.4% 2) 9.1% 3) 11.8% 4) 20.0% 5) 7.0%

1.A firm has a ROE of 16.875%, asset turnover of 2.5, and an equity multiplier of...

1.A firm has a ROE of 16.875%, asset turnover of 2.5, and an equity multiplier of 1.5. If the firm has sales revenue of $10000, what is its net income? Net income is $450 2.A firm has cash flow from assets of $200, cash flow to creditors of $125, and $15 of net equity raised. Calculate the amount of dividends paid to shareholders. Dividends paid : $90 3.What is the firm’s sustainable growth rate? I got 13.5% for sustainable growth...

What is the difference in in the equity multiplier between bank A and bank B, each...

What is the difference in in the equity multiplier between bank A and bank B, each with ROA of 1.5%, but bank A has equity-to-asset ratio of 6%, while bank B has an equity-to asset-ratio of 10%? a. 8.3 b. 10.0 c. 2.5 d. 6.7 e. none of the above

The long-run response to an increase in the growth rate of the money supply is shown...

The long-run response to an increase in the growth rate of the money supply is shown by shifting a. the short-run and long-run Phillips curves left. b. the short-run and long-run Phillips curves right. c. only the short-run Phillips curve left. d. only the short-run Phillips curve right.

write about chase bank as a whole Industry growth: Rate of growth in percentage terms (increase...

write about chase bank as a whole Industry growth: Rate of growth in percentage terms (increase in industry sales averaged for five-year period). Where is the industry in the life cycle - emerging, rapid growth, maturity, decline?

The dividend-growth model, suggests that an increase in thedividend growth rate will increase the value...

The dividend-growth model, suggests that an increase in the dividend growth rate will increase the value of a stock. However, an increase in the growth may require an increase in retained earnings and a reduction in the current dividend. Thus, management may be faced with a dilemma: current dividends versus future growth. As of now, investors’ required return is 10 percent. The current dividend is $0.9 a share and is expected to grow annually by 5 percent, so the current...

Explain how the Central Bank can increase the interest rate in the economy.

Given the information below for a bank, what is the Return on Equity? (ROE). Original Interest...

Given the information below for a bank, what is the Return on Equity? (ROE). Original Interest income 2,250 Interest Expense 1,500 Total assets 45,000 Security losses or gains 21 Earnings assets 40,000 Total liabilities 38,000 Taxes paid 16 Common shares outstanding 5,000 Noninterest income 800 Noninterest expense 900 Provisions for loan losses 250 A. 8.06% B. 9.59% C. 5.79% D. 6.5% E. 4.9%

the data is as follows: expected long-run growth rate: 5%, cost of equity is 10%, forecast...

the data is as follows: expected long-run growth rate: 5%, cost of equity is 10%, forecast horizon is 3 years, discounted (t=0) Terminal value = $500. Free cash flows to equity in year 1 is 100, year 2 is 150 and year 3 is 120. What is the value of the firm at today, i.e., t = 0?

If a bank raises its equity multiplier, which of the following rise? both its return on...

If a bank raises its equity multiplier, which of the following rise? both its return on equity and its risk of bankruptcy its return on equity, but not its risk of bankruptcy its risk of bankruptcy, but not its return on equity Neither its rate of return on equity nor its risk of bankruptcy.

Question