What should be the impact on a bank's return on assets and return on equity from increased use of off-balance-sheet activities?
What will be an ideal response?
Since off-balance-sheet activities generate income but do not add to assets or liabilities, the impact should be to increase the return on assets. Since ROA is calculated by dividing net income after taxes by total assets, only the numerator is increasing, not the denominator, so ROA should increase. The same thing could be said about return on equity (ROE); the net return after taxes increases, but the bank's capital does not, so ROE increases. This is the main reason banks are increasing their use of off-balance-sheet activities.
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In the figure above, using the midpoint method, the price elasticity of demand when the price falls from $7 to $6 is equal to
A) 2.50. B) 1.63. C) 0.40. D) 0.62. E) 1.00.
Describe what took place during the Industrial Revolution
What will be an ideal response?
Compensating differentials are
A) non-monetary benefits from being employed, such as health-care benefits. B) higher wages that compensate the more experienced workers in a field. C) wages paid to workers where the supply of labor is great relative to demand. D) higher wages that compensate workers for unpleasant aspects of a job.
What makes the demand curve of the perfectly competitive firm uniquely different from that of firms in other kinds of market structures?