RAJ Industries Earned an Income of $4,000,000 and Distributed $850,000

question 3

Multiple Choice

RAJ Industries earned an income of $4,000,000 and distributed $850,000 as dividends. A year later, earnings had risen by 5% and RAJ distributed earnings of $700,000. What may investors have concluded about RAJ?

• A) RAJ is retaining earnings to improve share prices.
• B) RAJ is paying a dividend in order to improve share prices.
• C) RAJ is indicating an expectation of significant future earnings growth.
• D) RAJ is going to retire debt and and replace it by issuing preferred shares.
• E) RAJ is signalling a concern that their Brazilian facilities would be taken over and nationalized.

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Definitions:

Secretory Activity

The process of producing and releasing substances such as enzymes or hormones from a cell or gland.

Hypothalamohypophysial Portal

The blood vessel system connecting the hypothalamus and the pituitary gland, allowing for the transport of regulating hormones.

Anterior Pituitary

The front part of the pituitary gland, which releases hormones that regulate several physiological processes, including growth and reproductive functions.

Hormones

Chemical messengers produced by glands in the body, transported by the bloodstream, to regulate physiology and behavior.