When Common Stock Has a Par Value

question 21

Multiple Choice

When common stock has a par value:

• A)the liability of the stockholders is limited to the par value.
• B)there will probably be additional paid-in capital on the balance sheet.
• C)the market value of the stock will be higher than if there is no par value.
• D)the paid-in capital will equal the par value of the number of shares issued.

Identify common errors in personal forecasting and planning due to cognitive biases.

Grasp the influence of social and cultural factors on individual economic decisions.

Understand the contribution of behavioral economics to explaining phenomena not accounted for by traditional economic models.

Explain the concept of prospect theory and its implications for individual decision-making.

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Definitions:

Annual Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues over a year.

Payback Period

The amount of time it takes for an investment to generate enough cash flow to recover its initial cost.

Accounting Rate of Return

A method used to determine the profitability of an investment, calculated by dividing the average annual accounting profit by the initial investment cost.

Straight-Line Depreciation

A methodology for dispensing the cost of a durable asset over its useful period in uniform annual allocations.