Finra Exam Series-7 Topic 3 Question 84 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 84
Topic #: 3

The Bubba Corporation has 900,000 of common outstanding and holds 100,000 shares as treasury stock. At the end of the third quarter $450,000 is distributed as a dividend on the common.

How much is the dividend per share?

A$0.45

B$0.50

C$2.00

D$2.22

Show Suggested Answer

Suggested Answer: A

$0.45. Since treasury stock does not receive dividends, divide $450,000 by the outstanding 100,000 shares to arrive at $0.45 per share.

by Shonda at Apr 14, 2024, 03:32 PM

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Kate

1 days ago

Good point. Treasury stock is not considered outstanding, so we should only use the 900,000 shares of common stock that are actually out there. The calculation would be the same: $450,000 / 900,000 = $0.50 per share.

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Natalie

2 days ago

I agree with the calculation, but I'm a bit concerned about the wording of the question. It mentions that the company holds 100,000 shares as treasury stock. Do we need to factor that into the equation somehow?

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Anjelica

3 days ago

That's right! So, the calculation would be $450,000 / 900,000 shares = $0.50 per share. The answer is B) $0.50.

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Dorian

5 days ago

Okay, let's think this through. We have 900,000 shares of common stock outstanding, and the company is distributing $450,000 as a dividend. To find the dividend per share, we need to divide the total dividend amount by the number of outstanding shares.

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Wilford

7 days ago

Hmm, this question seems straightforward, but I want to make sure I understand it correctly. Can someone walk me through the steps to solve this problem?

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