Which of the Following Does Not Correctly Describe the Effect

question 89

Multiple Choice

Which of the following does not correctly describe the effect of Mylan Company declaring and distributing a 2-for-1 common stock split?

• A)Mylan's current ratio remained the same.
• B)Mylan's return on equity ratio remained the same.
• C)Mylan's debt-to-equity ratio remained the same.
• D)Mylan's earnings per share remained the same.

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Definitions:

Security Market Line

A graphical representation of the expected return of investments at different levels of risk, based on the Capital Asset Pricing Model (CAPM).

Market Risk Premium

The excess return that investors require for choosing a risky investment over a risk-free one.

Excess Return

The return on an investment that exceeds the return on a risk-free asset such as a Treasury bond.

Risk-Free Asset

A secure financial asset offering a promised payoff without any chance of losing money, commonly found in the form of government bonds.