According to MM, an Increase in Expected Earnings Per Share

question 96

Multiple Choice

According to MM, an increase in expected earnings per share can leave the share price unchanged if the:

• A) firm's operating risk decreases.
• B) number of shares is decreased.
• C) required return on equity increases.
• D)firm has no financial leverage.

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Definitions:

Expected Loss

The anticipated amount of loss a party incurs due to risk, calculated as the sum of all possible losses each multiplied by the probability of that loss occurring.

Coastal Town

A town located near or on the coastline, often characterized by maritime activities and tourism.

Flood Control System

An infrastructure or set of strategies intended to manage the potential negative impacts of flooding on communities, including prevention measures and emergency responses.

Insurer

An entity that provides insurance coverage, assuming the risk of loss for its policyholders in exchange for premium payments.