Which Statement Is Correct About Basic EPS

question 92

Multiple Choice

Which statement is correct about basic EPS?

• A)It indicates the net income before tax attributable to a company's ordinary shares.
• B)It indicates the net income before tax attributable to a company's preferred shares.
• C)It indicates the net income attributable to a company's preferred shares.
• D)It indicates the net income attributable to a company's ordinary shares.

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Definitions:

Principal-Agent Problem

A dilemma in economics and organizational theory where one party (agent) is expected to act in the best interest of another party (principal) but may act in their own interest instead.

Profit Maximization

A business objective aiming to achieve the highest profit possible, guiding decisions on production, pricing, and investment.

Economic Theory

A set of principles and models that explain how economies function, covering the distribution, consumption, and production of goods and services.

Moral Hazard

A situation where one party engages in risky behavior knowing that it is protected against the consequences, often due to the existence of insurance or similar safety nets.