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Basic Question 0 of 5
Which of the following formulas is the formula for computing return on equity (ROE)?
B. Net income divided by equity
C. Sales divided by assets
A. Net income divided by assets
B. Net income divided by equity
C. Sales divided by assets
User Contributed Comments 7
| User | Comment |
|---|---|
| Gina | NI/A=ROI NI/E=ROE A/E=Fin.Leverage S/A=A Turnover |
| julescruis | thanks gina |
| godz | if you got this wrong dont show up at the exam center |
| Drzewes | GIna: NI/A is ROA ROI = NI/ Equity + total debt I am almost :) sure. |
| endlessfin1te | isn't Asset = Equity + Debt anyway? |
| johntan1979 | Look at the explanation given in the answer... the only way ROE > ROI is when the equity multiplier or leverage is > 1. In other words, ROI = NI/A = ROA |
| ldfrench | @godz, el oh el plz don't be mean (i mean it plz) |
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Edward Liu
Learning Outcome Statements
calculate and interpret the mean, variance, and covariance (or correlation) of asset returns based on historical data
calculate and interpret portfolio standard deviation
describe the effect on a portfolio's risk of investing in assets that are less than perfectly correlated
CFA® 2025 Level I Curriculum, Volume 2, Module 1.