The Rate of Return on Common Stock Equity Is Calculated

question 137

Multiple Choice

The rate of return on common stock equity is calculated by dividing

• A) net income less preferred dividends by average common stockholders' equity.
• B) net income by average common stockholders' equity.
• C) net income less preferred dividends by ending common stockholders' equity.
• D) net income by ending common stockholders' equity.

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Definitions:

Defensive Mergers

Mergers undertaken by companies to protect against potential threats, improve market position, or mitigate weaknesses.

Shareholders' Wealth

Refers to the overall value of the shares an investor holds in a company, which increases as the company's value goes up.

Government Policies

Strategies and measures adopted by a government to regulate, guide, and control activities within its jurisdiction, affecting economic, social, and administrative spheres.

Managers' Actions

Decisions and activities undertaken by the management of a company to achieve its objectives.