Suppose a Firm Pays Total Dividends of $50,000 Out of Net

question 16

Multiple Choice

Suppose a firm pays total dividends of $50,000 out of net income of $500,000. What would the firm's payout ratio be?

• A) 0.10
• B) 1.00
• C) 10.00
• D) 50.00

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Definitions:

Authorized

Having been given official permission or approval to perform a certain action or access certain information.

Shelter Principle

In commercial law, a rule that allows a person who acquires goods in good faith to retain them, even if the sale was not authorized by the owner.

HDC Status

Holder in Due Course Status, which is a legal term that provides certain protections to the holder of a negotiable instrument from claims and defenses that could be raised by prior parties.

Marketability

The ability of a product or service to be sold or accepted in a market.