A Group of Individuals Got Together and Purchased All of the Outstanding

question 23

Multiple Choice

A group of individuals got together and purchased all of the outstanding shares of common stock of DL Smith Inc. What is the return that these individuals require on this investment called?

• A) Dividend yield
• B) Cost of equity
• C) Capital gains yield
• D) Cost of capital
• E) Income return

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Definitions:

Demand Curve

An image that graphically shows the relationship between an item's selling price and the quantities that consumers are interested in buying.

Consumer Surplus

The economic benefit consumers receive when they pay less for a product or service than what they were willing to pay.

Total Surplus

The total societal benefits from trading a good or service, encapsulated by the combination of consumer surplus and producer surplus in a market.

Average Total Cost

The total cost divided by the quantity produced, denoting the cost per unit of production.