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The Following Information Was Extracted from Smurm Corporation's 2006 Annual

question 30

Multiple Choice

The following information was extracted from Smurm Corporation's 2006 annual report:
$\begin{array}{lr}\text { Common stock }\\\text { Shares outstanding } 12 / 31 / 05 & 90 \text { million } \\\text { New shares issued } 4 / 1 / 06 & 10 \text { million } \\\text { Shares outstanding } 12 / 31 / 06 & 100 \text { million }\end{array}$

$\text { Preferred stock }$
$\$ 10$ par, $10 \%$ , convertible into 2 shares of common stock, shares outstanding $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $50 \text { million }$
1 million options, each to purchase one common share at $\$ 50$ per share

$\begin{array}{lr} \text { Average for year} &\$75\\ \text { Beginning of year } &\$70\\ \text {End of year } &\$78\\\\ \text { Preferred dividends paid}&\$50,000,000\\ \text { Net income for 2006}&\$350,000,000\end{array}$
-Basic earnings per share for 2006 was:

Definitions:

Macroeconomic Factor

A variable that impacts the economy at a large scale, influencing economic outcomes like growth rates, unemployment, and inflation.

Single-Index Model

The Single-Index Model is a streamlined method to evaluate the return of a security or portfolio understanding its sensitivity to movements in a common market index.

Risk-Free Rate

The theoretical rate of return on an investment with zero risk of financial loss, typically associated with government bonds.

Market Index

A statistical measure that represents the performance of a group of stocks, bonds, or other assets, serving as a benchmark to track financial and economic performance.