Question
When discussing ROAE and ROAA ratios respond to the following questions: As a shareholder of a bank, which ratio would you be more concerned about
When discussing ROAE and ROAA ratios respond to the following questions: As a shareholder of a bank, which ratio would you be more concerned about and why? Now imagine that you're a depositor in a world where FDIC insurance doesn't exist...meaning you can lose your money if the bank fails. Which ratio do you care most about, and why? As regulators, which ratio do you think FDIC bank examiners focus on most? How does having more or less capital affect these ratios?
*Pay attention to the formulas given in the text: ROAA is calculated as: net income divided by average total assets. ROAE is calculated as: net income divided by average equity capital.
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