The Common Stock of Gillen Entertainment Is Selling for $65

question 40

Multiple Choice

The common stock of Gillen Entertainment is selling for $65 a share.The par value per share is $1.Currently,the firm has a total market value of $936,000.How many shares of stock will be outstanding if the firm does a 5-for-2 stock split?

• A)4,800 shares
• B)9,600 shares
• C)18,000 shares
• D)36,000 shares
• E)32,200 shares

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Definitions:

Earnings Per Common Share

A financial metric used to gauge the profitability of a company on a per-share basis, calculated as net income less dividends on preferred stock divided by the average number of common shares outstanding.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Book Value Per Share

A financial metric that calculates the value of a company's equity divided by the number of outstanding shares.

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits distributed in cash.