Suppose that First National Bank has $200 million in assets and $20 million in equity capital. a.
Question:
Suppose that First National Bank has $200 million in assets and $20 million in equity capital.
a. If First National has a 2% ROA, what is its ROE?
b. Suppose that First National’s equity capital declines to $10 million, while its assets and ROA are unchanged. What is First National’s ROE now?
Step by Step Answer:
a ROE ROA Bank assetsBank C...View the full answer
Money, Banking, and the Financial System
ISBN: 978-0134524061
3rd edition
Authors: R. Glenn Hubbard, Anthony Patrick O'Brien
Related Video
The Dupont analysis is an expanded return on equity formula, calculated by multiplying the net profit margin by the asset turnover by the equity multiplier. The DuPont analysis is also known as the DuPont identity or DuPont model.This Video will guide on how to calculate return on Equity and estimate profitability of shareholders using DuPont Analysis.
Students also viewed these Business questions
-
Vial-tek has an existing loan in the amount of $1.5 million with an annual interest rate of 9.5 percent. The company provides an internal company-prepared financial statement to the bank under the...
-
Vial-tek has an existing loan in the amount of $1.5 million with an annual interest rate of 9.5 percent. The company provides an internal company-prepared financial statement to the bank under the...
-
A corporation has $5 million in assets and $3 million in debt. During the year it takes in $750,000 in net revenue after deduction of all costs except for interest and incurs interest expenses of...
-
The coordinates of points A and B are given below: Easting Northing Height (meter) (meter) (meter) 41.676 66.446 225.973 127.066 31.063 185.401 Point A B What is the bearing of AB (from A to B)?...
-
"The probability is 0.99 that a 99% confidence interval contains the true value of the relevant population parameter." Is this statement true or false? Explain your choice.
-
The income statement and additional data of Value World, Inc., follow: Additional data: a. Collections from customers are $25,000 less than sales. b. Payments to suppliers are $1,600 more than the...
-
What are the possible consequences for failing to file the civil cover sheet?
-
The average stock price for companies making up the S&P 500 is $30, and the standard deviation is $8.20 (BusinessWeek, Special Annual Issue, Spring 2003). Assume the stock prices are normally...
-
The following information is provided for each Investment Center. Investment Center Cameras Income $ 6,500,000 Average Assets $ 23,900,000 Phones 2,114,000 15,100,000 Computers 850,000 15,600,000...
-
Peace Computer Corporation acquired 90 percent of Symbol Software Companys common stock on January 2, 20X3, by issuing preferred stock with a par value of $6 per share and a market value of $8.10 per...
-
The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB): U.S. Treasury bills ......................................$20 Demand deposits...
-
A Congresswoman introduces a bill to outlaw credit rationing by banks. The bill would require that every applicant be granted a loan, no matter how high the risk that the applicant will not pay back...
-
A consumer receives income y in the current period, income y' in the future period, and pays taxes of t and t' in the current and future periods, respectively. The consumer can borrow and lend at the...
-
What can a financial analyst find in the MD&A section of the annual report?
-
Describe what is meant by deferred taxes. In which situation can it become a liability and when can it become an asset?
-
What is the eventual goal of the IASB?
-
Define goodwill. How is it recorded on the balance sheet?
-
Research the joint FASB/IASB Financial Statement Presentation project. Write a short essay outlining the current status of the project and the expected changes to the financial statements.
-
use inductive reasoning to predict the next three numbers in the pattern (or sequence). 5, -5, 5, -5,. . .
-
The following exercises are not grouped by type. Solve each equation. x610x -9
-
Suppose that the FOMC decides to lower its target for the federal funds rate. How can it use open market operations to accomplish this goal? How can the FOMC use open market operations to raise its...
-
What are the three categories of discount loans that the Fed gives to banks?
-
What is the difference between dynamic and defensive open market operations?
-
provide the past financial statements of Harvey Norman (HVN) and JB HiFi (JBH) - two of the largest Australian retail companies that sell various consumer products. Equity analyst, Noa Young is...
-
The length of a pendulum is defined as the point of suspension to the object's center of mass. Since locating the center of mass is not so obvious, a group of students decides to measure the length...
-
1. Consider the following 3 semiannual bonds with par $1,000: Bond A: 5-year bond with coupon rate 6% Bond B: 10-year bond with coupon rate 6% Bond C: 10-year bond with coupon rate 10% Step 1: (1.5...
Study smarter with the SolutionInn App