ROE for a bank is calculated by:
A)dividing net after-tax income by total equity capital.
B)dividing total operating revenue less operating expenses by total assets.
C)dividing net pre-tax income by total equity capital.
D)noninterest income less noninterest expenses divided by total earning assets.
E)None of the options is correct.

Question

Quizplus · Accepted Answer

ROE (Return on Equity) is calculated by taking the net after-tax income of a company and dividing it by the total equity capital. This formula specifically allows the calculation of how much profit a bank generates from its shareholders' investments.

ROE for a Bank Is Calculated By