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49 on 12 Which of the following is true with respect to financial markets? Finish et ered Select one: O A. Financial markets are separated into short-term and long-term markets. O B. Securities maturing in one year or less trade in the money market. O C. Securities maturing in more than one year trade in the capital market. s out of 1 Flag stion D. All of the above are true.
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Which of the following is true with respect to financial markets?
Answer: Option [D] All of the above are true.
ROE per DuPont analysis = Profit margin*Asset turnover*Equity multiplier
The above can be reduced to Return on assets*Equity multiplier, as
Profit margin*Asset turnover = Return on assets.
Here, return on assets is 7% and equity multplier is 1 as there is no debt, the
entire assets being financed by equity.
Hence, ROE = 7%*1 = 7%
Answer: Option[A] 7%
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