Numerical Questions

Question 1

ROE

Answer 1

PROFIT (final - initial equity) / initial equity

Question 2

Core Tier 1 ratio

Answer 2

Equity/Capital / risk adjusted weights of assets

Question 3

Gordon growth model (no growth)

Answer 3

dividend yield / discounting future dividend yields

Question 4

Gordon growth model (with growth)

Answer 4

dividend yield (1+g) / discounting future dividend yields - g

Question 5

The rule of thumb in the Taylor rule (numerical question)

Answer 5

The rule of thumb in the Taylor rule is to raise the interest rate by about 1.5 times the increase in inflation.