When EP/P* Rises

question 63

Multiple Choice

When EP/P* rises

• A) IM will rise.
• B) IM will fall.
• C) IM may rise or fall.
• D) IM is not affected.
• E) IM and P* will both rise.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, distributing profits.

Treasury Stock

Shares that were once part of the outstanding shares and have been bought back by the company, reducing the amount of outstanding stock on the open market.

Paid-In Capital

Funds raised by a company through the issuance of common or preferred stock, representing the capital contributed by shareholders in exchange for shares.

No-Par Stock

Refers to shares issued without a nominal or face value, where the price is determined by the market or the company's board.