Which of the Following Statements Is CORRECT

question 21

Multiple Choice

Which of the following statements is CORRECT?

• A) Typically,a firm's DPS should exceed its EPS.
• B) Typically,a firm's net income should exceed its EBIT.
• C) If a firm is more profitable than average,we would normally expect to see its stock price exceed its book value per share.
• D) If a firm is more profitable than most other firms,we would normally expect to see its book value per share exceed its stock price,especially after several years of high inflation.
• E) The more depreciation a firm has in a given year,the higher its EPS,other things held constant.

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Definitions:

Null Hypothesis

A default hypothesis that there is no statistical significance in a set of given observations, aiming to be either rejected or not rejected based on test results.

Standard Error

The standard deviation of the sampling distribution of a statistic, most commonly the mean.

Test Statistic

A calculated value used in statistical hypothesis testing to determine whether to reject the null hypothesis, based on the difference between observed data and what is expected under the null hypothesis.

Alternative Hypothesis

The hypothesis that proposes a difference or effect, in contrast to the null hypothesis, which suggests no effect.