8. Evaluation of a bank's return on equity (ROE) Which of the following are the bank decisions affecting financial characteristics and a bank's return on equity (ROE)? Check all that apply. Same decisions as for a bank's return on assets (ROA) except overhead requirements and advertising Same decisions as for a bank's return on assets (ROA) Same decisions as for a bank's return on assets (ROA) except loan losses Capital structure decision Which of the following formulas converts a bank's return on assets (ROA) into a bank's return on equity (ROE)? ROE = RO A Leverage measure) OROE=ROA +Leverage measure ROEN ROA Leverage measure OROE= ROA x Leverage measure Complete the following statement about converting a bank's return on assets (ROA) into a bank's return on equity (ROE). financial leverage. This For a given positive level of ROA, a bank's ROE will be relationship explains why managers of banks prefer to use a if it has a capital ratio and degree of financial leverage. O ROE = ROA x Leverage measure lower Complete the following statement about converting a higher urn on assets (ROA) into a bank's return on equity (ROE). For a given positive level of ROA, a bank's ROE will be if it has a capital ratio and financial leverage. This relationship explains why managers of banks prefer to use a degree of financial leverage. ROE = ROA x Leverage measure more Complete the following statement about converting a bank's return on assets (ROA) into a bank's return or less (ROE). financial leverage. This For a given positive level of ROA, a bank's ROE will be relationship explains why managers of banks prefer to use a if it has a capital ratio and degree of financial leverage. Complete the following statement about converting a bank's low n assets (ROA) into a bank's return on equity (ROE). high it has a capital ratio and financial leverage. This degree of financial leverage. For a given positive level of ROA, a bank's ROE will be relationship explains why managers of banks prefer to use a