Question : ___________ is a measure of the efficiency of banks in managing their assets.
Option 1: Return on assets (ROA)
Option 2: Return on equity (ROE)
Option 3: Liquidity ratio
Option 4: Capital adequacy ratio (CAR)
Correct Answer: Return on assets (ROA)
Solution : The correct answer is (a) Return on assets (ROA).
Return on assets is a financial ratio that measures the profitability and efficiency of a bank in managing its assets. It indicates how effectively a bank generates profits from its total assets.
ROA is calculated by dividing the net income of the bank by its average total assets. The ratio represents the percentage of net income earned for each unit of assets employed by the bank. A higher ROA indicates better efficiency and profitability in utilizing the bank's assets to generate earnings.
Question : Which type of ratio states EBIT/Total assets?
Option 1: Liquidity ratio
Option 2: Return on total assets ratio
Option 3: Solvency ratio
Option 4: Turnover ratio
Question : ______________shows the relationship of profit (profit before interest and tax) with Capital Employed.
Option 1: Return on Equity
Option 2: Return on investment
Option 3: Net profit ratio
Option 4: Capital employed turnover ratio
Question : The commercial banks of India have to maintain a minimum percentage of cash, gold and other securities before lending loans to their customers. This is called the ____________.
Option 1: Capital Adequacy Ratio
Option 2: Current Account and Savings Account Ratio
Option 3: Statutory Liquidity Ratio
Option 4: Cash Reserve Ratio
Question : Rate of interest is determined by
Option 1: The rate of return on the capital invested
Option 2: Central Government
Option 3: Liquidity preference
Option 4: Commercial Banks
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