n NISM Certifications
XV NISM Series XV
Medium

ROCE = 8%, Cost of Debt = 10%. What is likely ROE?

Practice question from NISM XV Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Below 8%

    Correct answer

  2. B

    Above 10%

  3. C

    2%

  4. D

    Between 8–10%

Why this is the answer

Since the cost of debt (10%) is higher than ROCE (8%), the returns available to equity holders (ROE) are reduced, making ROE less than 8%.

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