Second National Bank is forecasting a return on equity of 15 percent for this ye

Question

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?

15 percent.

9 percent.

8 percent.

None of the other responses are correct.

6 percent.

15 percent.

9 percent.

8 percent.

None of the other responses are correct.

6 percent.

Explanation / Answer

Second National Bank is forecasting a return on equity =15%

paying the bank's to stockholders on net earnings=40%

ratio of capital to assets= 15/40

=6percent.

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