The TRC Bank has a net profit margin of 7.5%,an asset utilization ratio of 18%,and an equity multiplier of 20.What is the bank's ROE?
A)27.00 percent
B)1.35 percent
C)7.50 percent
D)1.50 percent
E)3.6 percent

Question

Quizplus · Accepted Answer

ROE = Net Profit Margin x Asset Utilization Ratio x Equity Multiplier
ROE = 7.5% x 18% x 20
ROE = 0.075 x 0.18 x 20
ROE = 0.27 or 27.00%

Therefore, the bank's ROE is 27.00 percent, which is option A.

The TRC Bank Has a Net Profit Margin of 7