madaochenggong

Hmmm I think more information would be needed.

I think I remember a question somewhere about selling a building and leasing it back but that the parent was still on the hook for recourse on loan used to buy the building from the parent. The trick was that when you consolidated the SPE you had to back a gain (on the sale to the SPE) from Net Income and the offsetting impact on Equity. Since the numerator decreased by a greater % than denominator, the ROE actually decreased.

It seemed like a question targeting someone who memorized the Schweser chart but didn't understand the underlying ratios and impact.