Bertram Corporation Had Net Income of $325,000 and Paid Dividends

question 188

Multiple Choice

Bertram Corporation had net income of $325,000 and paid dividends to common stockholders of $50,000 in 2014. The weighted average number of shares outstanding in 2014 was 50,000 shares. Bertram Corporation's common stock is selling for $45.50 per share on the New York Stock Exchange. Bertram Corporation's payout ratio for 2014 is

• A) $6.5 per share.
• B) 18%.
• C) 15.4%.
• D) 40%.

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Definitions:

Money Market

A segment of the financial market where short-term financial assets are traded, facilitating the borrowing and lending of short-term funds.

Liquidity Preference Theory

A theory that suggests individuals prefer to have their resources in liquid form as opposed to investing in long-term assets, affecting interest rates and economic activity.

Money Demanded

The total amount of money that households and businesses wish to hold at any given interest rate, at a specific time.

Federal Funds Rate

The interest rate at which banks lend reserves to each other overnight, serving as a key monetary policy tool of the Federal Reserve.