On Its 2008 Balance Sheet, Sherman Books Showed a Balance

question 44

Multiple Choice

On its 2008 balance sheet, Sherman Books showed a balance of retained earnings equal to $510 million. On its 2009 balance sheet, the balance of retained earnings was also equal to $510 million. Which of the following statements is most correct?

• A) The company must have had net income equal to zero in 2009.
• B) The company did not pay a dividend in 2009.
• C) If the company's net income in 2009 was $200 million, dividends paid must have also equaled $200 million.
• D) If the company lost money in 2009, they must have paid a dividend.
• E) None of the statements above is correct.

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Definitions:

Yield to Maturity

The total return anticipated on a bond if it is held until it matures, incorporating all coupon payments and the face value received at maturity.

Coupon Rate

The interest payment per annum on a bond, depicted as a percentage of its face value.

Ask Price

The lowest price at which a seller is willing to sell a financial instrument or commodity.