Last Year's Return on Equity Was 30 Percent, and While

Multiple Choice

Last year's return on equity was 30 percent, and while the same amount of earnings was generated this year, the ROE has decreased to 20 percent.The firm has no preferred stock.What caused the decrease?

A) Equity decreased by 10 percent
B) Equity decreased by 50 percent
C) Equity increased by 10 percent
D) Equity increased by 50 percent