One of the three major shortcomings of return on equity is that it ignores risk.

Name: One of the three major shortcomings of return on equity is that it ignores risk.
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Question

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Return on equity only considers the return generated by an investment in relation to the amount of shareholder equity, but it does not take into account the level of risk involved. This means that companies with high returns on equity may also have high levels of risk, making the investment riskier for shareholders.

One of the Three Major Shortcomings of Return on Equity