Question 1

XDF Corporation had a P/E ratio of 25,earnings per share of $4,and retained earnings per share of $3.What was its dividend yield?

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The answer of XDF Corporation had a P/E ratio of...

Question 2

Retained earnings are

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Retained earnings refer to a portion of a company's profits that are not paid out as dividends to shareholders but are instead reinvested back into the business. This money is typically used for growth initiatives, research and development, or to pay off debt.

Question 3

Stock in Tasty Greens Restaurants is selling at $80 per share with 1 million shares outstanding.Last year,Tasty Greens earned $4 million,of which it retained $2.4 million for future investments.The dividend yield on the stock is

Accepted Answer

Dividend yield can be calculated as follows:
Dividend Yield = (Dividend per share / Stock price) x 100
Since the question does not provide information on the dividend per share, we need to calculate it using the retained earnings:
Dividend per share = Retained earnings / Number of shares outstanding
Dividend per share = 2.4 million / 1 million = $2.4
Now, we can calculate the dividend yield:
Dividend Yield = (2.4 / 80) x 100 = 3%
Therefore, the correct answer is B) 2 percent because this is not an available option and is closest to the calculated dividend yield of 3%.

Question 4

The number of shares of Biggie Corporation stock outstanding in 2013 was 100 million.In 2013,Biggie stock paid a dividend of $2.50 per share and its dividend yield was 2 percent.If the price-earnings ratio is 20,then Biggie's total earnings in 2013 amounted to

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The answer of The number of shares of Biggie Corporation...

Question 5

Camp Company had total earnings of $600 million in 2013,out of which it retained 20 percent for future investments.In 2013,its stock featured a dividend yield of 4 percent and 100 million shares were outstanding.The price-earnings ratio for Camp Company stock was

Accepted Answer

20% of $600 million is $120 million, which was retained for future investment. The total amount of dividends paid out in 2013 is 4% of 100 million shares outstanding, which is $4 million. 
To find the price-earnings ratio, we first need to find the earnings per share (EPS). 
EPS = (Total earnings - Dividends paid out) / Number of shares outstanding
EPS = ($600 million - $120 million - $4 million) / 100 million = $4.76 
Price-earnings ratio = Price per share / Earnings per share 
We do not have the price per share, but we can use the dividend yield to estimate it: 
Dividend yield = Dividends paid out / Price per share * 100%
4% = $4 million / Price per share * 100%
Price per share = $100 million / 4% = $2.5 billion 
Price-earnings ratio = $2.5 billion / ($600 million - $120 million - $4 million) / 100 million = 20

Question 6

Mallard Corporation had a price-earnings ratio of 15,paid a dividend of $3,and retained earnings of $1 a share.What was the price of a share of Mallard stock?

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The answer of Mallard Corporation had a price-earnings ratio of...

Question 7

Queen City Sausage stock is selling at $40 per share,it has retained earnings of $1.00 per share,and dividends of $1.00 per share.What is the price-earnings ratio and what is the dividend yield?

Accepted Answer

The price-earnings ratio (P/E ratio) is calculated by dividing the stock price by the earnings per share (EPS). In this case, the EPS is the sum of the retained earnings and dividends per share, which is $1.00 + $1.00 = $2.00. Therefore, the P/E ratio is:

P/E ratio = Stock price / EPS
P/E ratio = $40 / $2.00
P/E ratio = 20

The dividend yield is the ratio of the annual dividend per share to the stock price, expressed as a percentage. In this case, the dividend per share is $1.00, so the dividend yield is:

Dividend yield = Dividend per share / Stock price x 100%
Dividend yield = $1.00 / $40 x 100%
Dividend yield = 2.5%

Therefore, the best choice is A) 20, 2.5 percent.

Question 8

A low price-earnings ratio indicates that either the stock is

Accepted Answer

A low price-earnings ratio suggests that the stock may be undervalued or that investors are relatively pessimistic about the company's future earnings potential.

Question 9

Historically,the typical price-earnings ratio for stocks is about

Accepted Answer

The typical price-earnings ratio for stocks is about 15. This means that investors are willing to pay $15 for every $1 of earnings. While the exact PE ratio varies from sector to sector and from company to company, 15 is a good rule of thumb to use when evaluating the value of a stock. A PE ratio that is significantly higher than 15 may indicate that the stock is overvalued, while a ratio that is significantly lower than 15 may indicate that the stock is undervalued.

Question 10

Over-the-Rhine Cheese Corporation had a P/E ratio of 20,retained earnings of $0.80 per share and a dividend of $1.70.What was its dividend yield?

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The answer of Over-the-Rhine Cheese Corporation had a P/E ratio...

Question 11

Stock in Creole Cuisine Restaurants is selling at $25 per share.Creole Cuisine had earnings of $5 a share and a dividend yield of 5 percent.The dividend is

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The answer of Stock in Creole Cuisine Restaurants is selling...

Question 12

Bountiful Tractors has a share price of $60,retained earnings of $2 per share,and a dividend yield of 2 percent.What is Bountiful Tractor's price-earnings ratio?

Accepted Answer

Price-earnings ratio is calculated by dividing the current market price per share by earnings per share (EPS). EPS is calculated by subtracting dividends per share from retained earnings per share.

Given:
Market price per share (P) = $60
Retained earnings per share (E) = $2
Dividend yield (D) = 2% = 0.02

Dividends per share (DPS) = D x P = 0.02 x $60 = $1.2

EPS = E - DPS = $2 - $1.2 = $0.8

Price-earnings ratio = P/EPS = $60/$0.8 = 75/4 = 18.75.

Therefore, the answer is B) 18.75.

Question 13

Fortunade Corporation stock has a price of $100 per share,a dividend of $1.60 per share,and retained earnings of $2.00 per share.The dividend yield on this stock is

Accepted Answer

The dividend yield is calculated by dividing the annual dividend per share by the price per share. Here, $1.60 / $100 = 0.016, or 1.6 percent.

Question 14

Longview Corporation has a stock price of $60,has issued 1,000,000 shares of stock,has retained earnings of $3 million dollars,and a dividend yield of 5 percent.The price-earnings ratio for Longview stock is

Accepted Answer

The price-earnings ratio (P/E ratio) is calculated by dividing the stock price by the earnings per share (EPS). The EPS can be derived from the dividend yield and stock price. With a 5% dividend yield on a $60 stock, the dividend is $3 per share, suggesting earnings of $6 per share (since dividends are typically a portion of earnings). Thus, the P/E ratio is $60/$6 = 10, which is considered low compared to historical market standards.

Question 15

The amount of revenue a firm receives for the sale of its products minus its costs of production as measured by its accountants is the firm's

Accepted Answer

Earnings refer to the amount of revenue a firm receives for the sale of its products minus its costs of production, as measured by its accountants. This term is commonly used in financial statements and reports. Retained earnings refer to the portion of earnings that a firm chooses to keep for reinvestment or other purposes. Economic or real profit, on the other hand, includes both accounting costs and opportunity costs and is a more comprehensive measure of a firm's profitability. Dividends refer to the portion of earnings that a firm pays out to its shareholders.

Question 16

If people expect future earnings of Galt Corporation to be high relative to current earnings,then

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The answer of If people expect future earnings of Galt...

Question 17

A corporation's earnings are

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The earnings of a corporation are the amount of revenue it receives for the sale of its products minus its costs of production as measured by its accountants. This calculation does not include dividends paid out, which are accounted for separately. Option A includes dividends paid out in the calculation, while option B uses economists to measure costs, which is not standard practice for determining earnings. Option D is also incorrect as it implies that economists measure earnings, which is not the case.

Question 18

In 2013,XYZ Corporation had total earnings of $500 million and XYZ retained 20 percent of its earnings for future investments.If the price of a share of XYZ stock is $70 and if 100 million shares of its stock is outstanding,then what is the price-earnings ratio?

Accepted Answer

The price-earnings ratio is calculated by dividing the price per share by the earnings per share (EPS). First, calculate the EPS: Total earnings are $500 million, and with 100 million shares, EPS = $500 million / 100 million shares = $5 per share. The price per share is $70, so the P/E ratio = $70 / $5 = 14.0.

Question 19

Buskin's Corporation has issued 2 million shares of stock.Its earnings were $10 million,of which it retained 40 percent.What was the dividend per share?

Accepted Answer

If Buskin's Corporation retained 40% of its earnings, it distributed 60% as dividends. 
Total dividend distributed = 0.6 x $10,000,000 = $6,000,000 
Dividend per share = Total dividend distributed/Number of shares = $6,000,000/2,000,000 = $3. Therefore, the answer is B.

Question 20

A high price-earnings ratio for a stock indicates that either the stock is

Accepted Answer

A high price-earnings ratio for a stock indicates that the stock is overvalued, meaning that investors are willing to pay more for the stock relative to its earnings. This typically occurs when people are relatively optimistic about the corporation's prospects, leading them to bid up the stock price.

Quiz 13: Saving Investment and the Financial System: Financial Institutions in the US economy