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Last Year's Return on Equity Was 30

Question 3

Multiple Choice

Last year's return on equity was 30%.This year the ROE has decreased to 20% even though the firm's earnings equaled last year's earnings.The firm has no preferred stock.What caused the decrease?


A) Equity decreased by 10%.
B) Equity decreased by 50%.
C) Equity increased by 10%.
D) Equity increased by 50%.

Correct Answer:

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