Business & Finance

A premium on common stock:

Is the amount paid in excess of par by purchasers of newly issued stock

Is the difference between par value and issue price when the amount paid is below par

Represents profit from issuing stock

Represents capital gain on sale of stock

Is prohibited in most states

 

17. The amount of income earned per share of a company’s common stock is known as:

Restricted retained earnings per share

Earnings per share

Continuing operations per share

Dividends per share

Book value per share

 

18. A company has net income of $850,000. It also has 125,000 weighted-average common shares outstanding and a market value per share of $115. The company’s price-earnings ratio is equal to:

16.9

14.7

92.0

13.5

8.0

 

19. A company issues at par 7% bonds with a par value of $500,000 on June 1, which is 5 months after the most recent interest date. How much total cash interest is received on May 1 by the bond issuer?

$0

$2,916.66

$100,000.00

$14,583.33

$35,000.00

 

20. A company’s board of directors’ votes to declare a cash dividend of $0.75 per share. The company has 15,000 shares authorized, 10,000 issued and 9,500 shares outstanding. The total amount of the cash dividend is:

$375

$4,125

$7,125

$7,500

$11,250

Solution: