Question 1

Buskins Corporation has issued 2 million shares.Its earnings were $10 million of which it retained $6 million.What was the dividend per share?

Accepted Answer

The answer of Buskins Corporation has issued 2 million shares.Its...

Question 2

Queen City Sausage Ltd.stock is selling at $40 per share.It has retained earnings of $2.00 per share,and dividends of $0.50 per share.What is the price/earnings ratio?

Accepted Answer

The price/earnings ratio is calculated by dividing the current stock price by the earnings per share. In this case, the earnings per share is $2.00, so the price/earnings ratio is $40/$2.00 = 20.

Question 3

Which of the following best defines a corporation's earnings?

Accepted Answer

Earnings of a corporation are defined as the amount of revenue the corporation receives for the sale of its products, minus its costs of production, as measured by its accountants. This measure does not include dividends paid out.

Question 4

Which of the following is a Canadian stock market index?

Accepted Answer

S&P/TSX (Toronto Stock Exchange) is a Canadian stock market index that tracks the performance of Canada's largest companies listed on the TSX. S&P 100 and S&P 500 are American stock market indices, and S&P/CAD is not a recognized index.

Question 5

What has the typical price/earnings ratio been historically?

Accepted Answer

The typical price/earnings ratio has been about 15 historically.

Question 6

Which of the following best defines retained earnings?

Accepted Answer

Retained earnings are profits earned by a corporation that are not distributed as dividends to shareholders but instead are kept in the company for future investments or to pay off debts.

Question 7

Which of the following terms refers to the profits paid out to shareholders?

Accepted Answer

Dividends are the profits paid out to shareholders. Retained earnings refer to the profits a company keeps for future use, while interest is the cost of borrowing money and shares represent ownership in a company.

Question 8

What does a high price/earnings ratio indicate?

Accepted Answer

A high price/earnings ratio indicates that the stock is trading at a higher price relative to its earnings per share. This can either mean that the stock is overvalued, or that investors have become more optimistic about the corporation's prospects, leading them to bid up the stock price.

Question 9

What does a low P/E for a stock indicate?

Accepted Answer

A low P/E ratio may indicate that investors expect earnings to decrease in the future, possibly due to increased competition or other factors that could negatively impact the company's profitability.

Question 10

PacknCamp Corporation has a price of $50,has issued 2 million shares,has increased its cumulated retained earnings by $2 million,and has a dividend yield of 2 percent.What is the price/earnings ratio of PacknCamp?

Accepted Answer

The answer of PacknCamp Corporation has a price of $50,has...

Question 11

Table 8-1
The following table shows stock prices and volumes for a few hypothetical companies.
 
-Refer to Table 8-1.What were company D's earnings per share?

Accepted Answer

Company D's earnings per share were $1.64.

Question 12

Table 8-1
The following table shows stock prices and volumes for a few hypothetical companies.
 
-Refer to Table 8-1.In dollar terms,which company paid the highest dividend per share?

Accepted Answer

The answer of Table 8-1
The following table shows stock prices...

Question 13

Which of the following terms refers to the profits NOT paid out to shareholders?

Accepted Answer

Retained earnings are the profits that a company has earned but has not distributed as dividends to its shareholders. Dividends (B) are the portion of profits that are paid out to shareholders. Revenue (C) refers to the total amount of income that a company generates from its regular business activities. Costs (D) refer to the expenses incurred by a company in the process of generating revenue.

Question 14

What is the "volume" as reported in stock tables?

Accepted Answer

In stock tables, the "volume" refers to the total number of shares that were traded during a given period of time, typically a day. It is typically reported in terms of the number of shares traded, and not a calculation based on price or shares outstanding.

Question 15

Which of the following terms refers to the amount of revenue a firm receives for the sale of its products,minus its costs of production,as measured by its accountants?

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 often used interchangeably with "profits."

Question 16

What is a dividend yield?

Accepted Answer

Dividend yield is the percentage of the current share price that a company pays out as dividends annually. It is calculated by dividing the annual dividend per share by the current market price per share and multiplying by 100. Therefore, option A is the correct choice.

Question 17

Suppose Sarah Lee Corporation stock has a P/E ratio of 8.Which of the following best describes this P/E ratio?

Accepted Answer

The answer of Suppose Sarah Lee Corporation stock has a...

Question 18

Mount Adams Jazz Corporation has a price of $50,a dividend of $0.60,and retained earnings of $1.00 per share.What is the dividend yield on this stock?

Accepted Answer

The answer of Mount Adams Jazz Corporation has a price...

Question 19

Stock in Synergistic Corporation is selling at $25 per share.It had earnings of $5 a share and a dividend yield of 5 percent.What is the dividend?

Accepted Answer

Dividend yield is the annual dividend payment per share divided by the stock price. 
Here, we know the stock price is $25 and the dividend yield is 5%, which means the annual dividend payment per share is:
($25 x 5%) = $1.25
Therefore, the dividend per share is $1.25.

Question 20

Which of the following is the single most important piece of information about a stock?

Accepted Answer

The price of the stock is the single most important piece of information because it determines the value of an investor's investment and potential return on investment. While other factors such as price/earnings ratio and dividend are important, they are secondary to the stock price. Volume can also be a useful indicator, but it does not necessarily indicate the stock's overall value.

Quiz 8: Saving,Investment,and the Financial System

Buskins Corporation has issued 2 million shares.Its earnings were $10 million of which it retained $6 million.What was the dividend per share?