A bank's return on assets (ROA) could be lower than desired because of all of the following except:
A) the bank has experienced heavy loan losses.
B) the bank was locked into fixed-rate loans prior to a rise in market interest rates.
C) the bank is receiving a relatively small amount of noninterest income.
D) the bank has reduced its noninterest expenses.

Question

Quizplus · Accepted Answer

The bank reducing its noninterest expenses would actually help to increase its return on assets, not decrease it. Therefore, all of the other options (heavy loan losses, fixed-rate loans, small noninterest income) could cause a lower ROA.

A Bank's Return on Assets (ROA) Could Be Lower Than