The equity multiplier, EM, is 1/(1-D/A) where D/A is the debt to assets ratio. ROE=ROA*EM. Which statements are true with regards to banks and the equity multiplier? More than one statement can be correct.

a. Banks commonly have a D/A of around 90% resulting in an EM of 10

b. A high equity multiplier can result in a high probability of bankruptcy

c. The higher the EM the more stable the company

d. Most companies have a much lower EM than banks