BVI Corporation Had Net Income of $1,600,000 and Paid Dividends

question 208

Multiple Choice

BVI Corporation had net income of $1,600,000 and paid dividends to common stockholders of $320,000 in 2017. The weighted average number of shares outstanding in 2017 was 500,000 shares. BVI Corporation's common stock is selling for $50 per share on the NASDAQ. BVI Corporation's payout ratio for 2017 is

• A) $5 per share.
• B) 20%.
• C) 32%.
• D) 5%.

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Definitions:

Beta

A measurement of a stock's volatility in relation to the overall market; a beta above 1 indicates that the stock's price is more volatile than the market, while a beta below 1 indicates less volatility.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs).

Risky Assets

Financial assets that carry a higher degree of risk of loss, such as stocks, compared to less risky assets like government bonds.

Risk-Free Asset

An investment with zero default risk, typically government bonds, providing a basis for comparing with riskier assets.