The Closer the Income Lorenz Curve Is to the Line

question 7

Multiple Choice

The closer the income Lorenz curve is to the line of equality,

• A)the more equal is the income distribution.
• B)the less equal is the income distribution.
• C)the more unfair is the income distribution.
• D)the richer are the highest 5 percent of households.
• E)the poorer are the highest 5 percent of households.

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Definitions:

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if a stock is over or undervalued.

Market Price

The present rate at which a service or asset is being traded.

Net Income

The final amount of money a company makes after removing all operational costs, taxes, and additional expenses from the overall income.

Return On Common Stockholders' Equity

A financial ratio that measures the profitability of a company from the perspective of common stockholders, calculated by dividing net income available to common shareholders by average common stockholder's equity.