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20 October, 08:17

Why do equity holders care more about roe than about roa?

a. roe measures how efficiently the bank is being run, while roa measures how much equity holders are earning.

b. a change in roe indicates a change in the safety of the investment, while a change in roa does not.

c. roe measures how much equity holders are earning, while roa measures how efficiently the bank is being run.

d. a higher roe indicates a higher level of liquidity for the investment, while a higher roa does not?

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  1. 20 October, 08:25
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    C. ROE measures how much equity holders are earning, while ROA measures how efficiently the bank is being run.

    ROE = net income / shareholder's equity

    ROA = net income/total assets
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