Porter Hardware, Inc

question 40

Multiple Choice

Porter Hardware, Inc. issues $2 par common stock. Which of the following is true?

• A) $2 per share is presented on the balance sheet in the common stock account.
• B) $2 per share is the maximum selling price for these shares of stock.
• C) Liabilities will increase as a result of this transaction.
• D) $2 in dividends will be paid to the stockholders as a result of this transaction.

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Definitions:

Risk Premiums

Additional returns expected by an investor for taking on additional risk, over and above the risk-free rate of return.

Multifactor APT

Multifactor Arbitrage Pricing Theory, a model that describes the relationship between risk and expected return with multiple factors.

Beta

An indicator of the level of fluctuation, or inherent risk, of an asset or collection of assets relative to the overall market.