Quasar Corporation Had Net Income of $300,000 and Paid Dividends

question 48

Multiple Choice

Quasar Corporation had net income of $300,000 and paid dividends to common stockholders of $40,000 in 2015. The weighted average number of shares outstanding in 2015 was 60,000 shares. Quasar Corporation's common stock is selling for $35 per share on the New York Stock Exchange. Quasar Corporation's price-earnings ratio is

• A)5.7 times.
• B)7 times.
• C)14 times.
• D)8.1 times.

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Definitions:

Endorsement

The act of signing the back of a financial document or negotiable instrument, thereby transferring rights or authorizing actions related to the document.

Delegatee

A third party who is not part of the original contract but to whom duties to perform are transferred by one of the contracting parties (a delegator).

Order Instrument

An instrument payable to a specific, named payee.

Instrument Payable

A written document that promises the payment of a definite amount of money either on demand or at a future date.