-Return on Common Equity for 2005 Is:
A)11

question 21

Multiple Choice

$$\begin{array} { l r r } \text { Operating assets } & \underline { 2005 } & \underline { 2004 } \\\text { Short-term debt } & 10,500 & \$ 10,000 \\\text { Long-term debt } & 3,5000 & 1,000 \\\text { Minority interest } & 500 & 4,000 \\\text { Common equity } & 5,500 & 5,000 \\& & \\\text { Operating income } & 1,350 & \\\text { Interest expense } & 350 & \\\text { Tax expense } ( 40 \% ) & 400 & \\\text { Minority interest } & 50 & \\\text { Net income } & 550 &\end{array}$$
-Return on common equity for 2005 is:

• A)11.42%.
• B)10.0%.
• C)11.0%.
• D)10.47%.

---

Definitions:

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, typically without voting rights but with a fixed dividend payment.

Issued

Pertains to the act of making securities available for sale to the public or allotting them as part of compensation to employees or other stakeholders.

Beta

A measure of a stock's volatility in relation to the overall market.

Cost of Equity

The hypothetical payment made by a business to its equity holders as a reward for the risk involved in investing their money.