MacArthur Company Began Operations on March 1, 2015

question 3

Multiple Choice

MacArthur Company began operations on March 1, 2015.The corporate charter authorized issuance of 3,000 shares of $2 par value common stock.MacArthur sold all of the stock on March 1.On May 1, MacArthur repurchased 2,000 of the outstanding shares.On May 14, MacArthur sold 1,200 of the treasury shares.On June 1, MacArthur declared a 2-for-1 stock split.As a result of the split, what occurred?

• A)Assets declined.
• B)Stockholders' equity increased.
• C)Stockholders' equity decreased.
• D)Total stockholders' equity stayed the same.

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Definitions:

Annual Coupon Bond

A bond that pays interest to the holder annually until its maturity, at which point the principal is repaid.

Real Rate

The interest rate that has been adjusted for inflation, reflecting the true cost of borrowing or real yield on an investment.

Inflation

The rate at which the comprehensive cost of goods and services inflates, sapping the buying power.

Total Percentage Return

The total return on an investment, including both capital gains and dividends, expressed as a percentage of the initial investment.