RI question question

HuskyGrad2010

Stmt1: RI is positive and continues at the same level year after year

Stmt2: As ROE = r, RI tends to zero

Stmt3: RI growth declines over time and eventually reaches zero.


Which of the statements is least accurate.
According to me it is 1 but answer says 3.

yospaghetti

RI declines over time and eventually reaches zero. (not RI growth)

cv4cfa

3 is correct. Usually as a company matures or is in a mature industry its ROE returns to its expected rate of return , gradually . At this point it is only making enough to satisfy the rate of return of the equity investors and has no residual income .