Answer:
From the attached excel file, we have:
a-1. We have:
ROE under recession = 10.43%
ROE under normal = 13.21%
ROE under expansion = 14.92%
a-2. We have:
Percentage changes in ROE when the economy enters a recession = -21.00%
Percentage changes in ROE when the economy expands = 13.00%
b-1. We have:
ROE under recession = 15.63%
ROE under normal = 21.06%
ROE under expansion = 24.42%
b-2. We have:
Percentage changes in ROE when the economy enters a recession = -25.77%
Percentage changes in ROE when the economy expands = 15.95%
c-1. We have:
ROE under recession = 8.14%
ROE under normal = 10.30%
ROE under expansion = 11.64%
c-2. We have:
Percentage changes in ROE when the economy enters a recession = -21.00%
Percentage changes in ROE when the economy expands = 13.00%
c-3. We have:
ROE under recession = 12.19%
ROE under normal = 16.43%
ROE under expansion = 19.05%
c-4. We have:
Percentage changes in ROE when the economy enters a recession = -25.77%
Percentage changes in ROE when the economy expands = 15.95%
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question. Kindly see the attached pdf file for the complete question.
Also note: See the attached excel file for all the calculations required.
In the attached excel file, the following formula is used:
Percentage in ROE = ((ROE of Recession or Expansion - ROE of Normal) / ROE of Normal) * 100
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pdf
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