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QUESTION
on in assets with an ROA of 3%, what would happen to the ROE if the leverage ratio fell from 6% to 4% because of an increase in the use of borrowings?...
If a bank maintains $10 billion in assets with an ROA of 3%, what would happen to the ROE if the leverage ratio fell from 6% to 4% because of an increase in the use of borrowings?
The answer is ROE would increase from 50% to 75%
I need an explanation
