During the Current Year, High Corporation Had 3 Million Shares

question 61

Multiple Choice

During the current year, High Corporation had 3 million shares of common stock outstanding. Five thousand, $1,000, 6% convertible bonds were issued at face amount at the beginning of the year. High reported income before tax of $4 million and net income of $2.4 million for the year. Each bond is convertible into ten shares of common. What is diluted EPS?

• A)$.85.
• B)$.86.
• C)$.80.
• D)$.79.

Distinguish between different business entities (sole proprietorship, partnership, and corporation) regarding structure and liability.

Recognize the principles of ratification and estoppel in agency relationships.

Understand the applications and limitations of the concept of limited liability in business organizations.

Understand the concept and implications of the production possibility frontier (PPF) and its shape.

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Definitions:

Business Expectations

Business Expectations relate to the outlook that firms have regarding future economic conditions, influencing their decisions on investments and expansions.

Investment Demand Curve

A graphical representation showing the inverse relationship between the rate of interest and the quantity of investment demanded by businesses.

Upward Sloping

An upward sloping curve represents a scenario where there is a direct relationship between two variables, such as price and quantity supplied in a supply curve.

Government Purchases

Expenditures made by the public sector on goods and services, such as infrastructure, education, and defense.