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Suppose that the banks earnings measured by roe drop

Question: 1. Suppose that a bank has a return on equity capital of 12 percent and that its retention ratio is 35 per-cent. How fast canthis bank's assets grow with-out reducing its current ratio of capital to assets?

2. Suppose that the bank's earnings (measured by ROE) drop unexpectedly to only two-thirds of the expected 12 percent figure. What would happen to the bank's ICGR?

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Finance Basics: Suppose that the banks earnings measured by roe drop

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