A Distribution of Earnings to the Stockholders of a Corporation

question 3

Multiple Choice

A distribution of earnings to the stockholders of a corporation is a(n)

• A) par distribution.
• B) dividend.
• C) earnings per share.
• D) distributed payment.
• E) common payment.

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Definitions:

Risk-Free Rate

The rate of return on an investment with no risk of financial loss, often represented by the yield on government securities.

Market Risk Premium

The additional return an investor expects to receive from a market portfolio over a risk-free rate due to the inherent risks.

Beta

In finance, beta is a measure of a stock's volatility in relation to the overall market; a higher beta indicates greater volatility and therefore higher risk and potential return.

Required Return

The minimum expected yield by investors to compensate for the risk of an investment.