The Rate of Return That Owners of Capital Must Receive

question 213

Multiple Choice

The rate of return that owners of capital must receive in order to induce them to continue supplying the capital is often referred to as

• A) accounting profit.
• B) the normal or market rate of return.
• C) economic profit.
• D) the accounting rate of return.

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Definitions:

Paid-in Capital

Funds raised by a company through the issuance of shares to investors, representing the money that shareholders have invested in the business beyond the initial value of the shares.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing corporation.

Retained Earnings

The accumulated net income of a company that has not been distributed to shareholders as dividends.

Paid-in Capital

Funds raised by a company through the issuance of shares to shareholders, representing the funding the company has received from equity rather than from ongoing operations.