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Year ROE 2017 2018 Leverag ROA 44.23% 7.2675 6.09% 85.70% 5.3176 16.12%

Discuss the risk/return trend for each ratio

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Answer #1

From the year 2017 to 2018, visible change is the leverage that has been lowered down from 7.2675 to 5.3176.

As a result, return on equity has been increased significantly from44.23% to 85.70% and return on assets from 6.09% to 16.12%

The same is due to the reduced leverage, wherein more of the investments were in equity which is riskier than the debt portion. Because of more risk, more reward is evident in terms of return on equity and return on assets.

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Discuss the risk/return trend for each ratio Year ROE 2017 2018 Leverag ROA 44.23% 7.2675 6.09%...
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