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?
$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.
When a corporation issues a nonconvertible debenture, what is the effect upon its net worth?
it is unchanged. The debentures add to liabilities and to cash (an asset) received from the sale. There is no effect on net worth.
Which of the following persons would consider annual reports of a corporation as the most important factor in making investment decisions?
a fundamental analyst. These analysts are guided by computations about a company's performance using data in annual reports.
Which of the following options positions is characteristic of a short straddle?
long one put and short one call. This is a short straddle. A position that is long one put and long one call is a long straddle.
Which of the following best describes depreciation?
deductions from gross income to offset lower value of equipment. Depreciation is the deduction of costs for capital assets as their value declines.
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