A Company Declared and Paid $1 Million in Dividends to Its

question 38

Multiple Choice

A company declared and paid $1 million in dividends to its common stockholders. The effect of this transaction is that the

• A)earnings per share decreased.
• B)earnings per share increased.
• C)current ratio increased.
• D)debt-to-equity ratio increased.

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Definitions:

Rent Control

A government policy or law that sets a maximum price landlords can charge for rent.

Opportunity Costs

The cost of the next best alternative foregone when making a decision.

Wasted Time

Time that is not used effectively or productively.

Price Floor

A government-imposed minimum price for goods or services, aimed at preventing market prices from falling below a certain level to protect producers.