Second National Bank Is Forecasting a Return on Equity of 15

Multiple Choice

Second National Bank is forecasting a return on equity of 15 percent for this year.The board of directors wants to maintain its current policy of paying the bank's stockholders 40 percent of any net earnings the bank will earn.How fast can the bank's assets grow this year without jeopardizing its ratio of capital to assets?

A) 15 percent
B) 9 percent
C) 8 percent
D) 6 percent
E) None of the options is correct.