Which One of the Following Correctly Expresses the Clean Surplus

question 70

Multiple Choice

Which one of the following correctly expresses the clean surplus relationship?

• A) The change in book value per share is equal to earnings per share minus dividends.
• B) The change in retained earnings is equal to net income.
• C) The change in market value per share is equal to the change in book value per share.
• D) The change in market value per share is equal to earnings per share minus dividends.
• E) The rate of change in book value per share is equal to the firm's discount rate.

---

Definitions:

Fair-Return Price

A price that covers production costs and allows for a normal profit margin, considered equitable for both producers and consumers.

Regulating Monopolies

Government policies or laws designed to control or limit the power of monopoly firms to ensure fair competition and protect consumers.

Price Discrimination

The strategy of selling the same product or service at different prices to different customers, often based on the willingness to pay, market segment, or purchase volume.

Conditions

The circumstances or criteria affecting the operation of markets or the status of economic factors.