A Previously Well-Respected and Trusted President of a Corporation Is

question 405

Multiple Choice

A previously well-respected and trusted president of a corporation is accused of fraud. At the same time interest rates unexpectedly fall. Which of the above would tend to make the price of the stock rise?

• A)the announcement and the fall in interest rates
• B)the announcement but not the fall in interest rates
• C)the fall in interest rates, but not the announcement
• D)neither the announcement nor the fall in interest rates

---

Definitions:

Total Equity

The residual interest in the assets of a business after deducting liabilities, representing the shareholders' ownership interest.

Retained Earnings

Retained Earnings are the portion of a business's profits not distributed to shareholders as dividends, but kept in the company to reinvest in the business or pay off debt.

Liquidating Dividend

A type of dividend paid by a company to its shareholders out of its capital base, indicating a return of some of the original investment rather than profit.

Capital Contributed

The total value of cash and other assets that shareholders or owners have given to a company in exchange for an ownership interest.