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Your firm has net income of $5,000. It also has accounting net worth of $20,000. Through extensive calculations of your risk exposure, you determine that
Your firm has net income of $5,000. It also has accounting net worth of $20,000. Through extensive calculations of your risk exposure, you determine that you ought to have equity of $30,000- i.e. your Economic Capital is $30,000 What is your convention Return on Equity (RoE)? What is your Risk-Adjusted-Return-on Capital (RAROC)
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