To find a bank's return on its equity, we:
A)divide its profits by its total assets.
B)divide its profits by its capital.
C)subtract its bank capital from its total income.
D)subtract its bank capital from its profits.

Question

Quizplus · Accepted Answer

Return on equity is calculated by dividing a bank's profits by its capital, not total assets. Option A is incorrect because total assets do not directly represent equity. Option C and D are incorrect as they do not calculate the return on equity.

To Find a Bank's Return on Its Equity, We