NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Investing in Stocks (NISM XXI-A)
A company has net profit after tax of Rs 60 crore and average shareholders' equity of Rs 400 crore. Its return on equity (ROE) is:
ROE is 15%, calculated as net profit of Rs 60 crore divided by average shareholders' equity of Rs 400 crore. It measures the profit generated on each rupee of owners' capital, and is commonly used in stock analysis.
- A6.7%
- B15%Correct
- C24%
- D66.7%
Explanation
ROE = Net profit / Average equity = 60/400 = 15%. Check: 15% of 400 = 60. Dividing equity by profit gives 6.67 times, not a percentage, and the other options come from wrong arithmetic.
Did you get it right without looking?
One question tells you little. A timed set on Investing in Stocks (NISM XXI-A) shows your real accuracy, how long you take and where you lose marks.
More Investing in Stocks (NISM XXI-A) questions
- Shares of Sundaram Ltd. were bought at Rs 400. During the year the investor received dividends of Rs 12 per share and the price at year-end …
- A company's shares are quoted at ₹480 and its earnings per share for the last year were ₹32. What is its price-to-earnings (P/E) ratio?
- A company with 10 crore shares outstanding has a net profit of ₹150 crore and pays out ₹60 crore as dividend. If the share trades at ₹300, w…
- A company with 10 crore shares outstanding has a net profit of ₹150 crore, and pays total dividends of ₹45 crore. What is its dividend payou…
- A stock trades at a price of Rs 450 and its book value per share is Rs 150. What is its price-to-book value ratio?
- A company declares a dividend of Rs 6 per share. The stock's current market price is Rs 240. What is its dividend yield?