Suppose a Firm Pays Total Dividends of $200,000 Out of Net

question 10

Multiple Choice

Suppose a firm pays total dividends of $200,000 out of net income of $2.5 million. What would the firm's payout ratio be?

• A) 0.08
• B) 0.80
• C) 8.00
• D) 80.00

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Definitions:

Full Employment

A situation in an economy where all available labor resources are being used in the most economically efficient way, typically characterized by low unemployment.

Cyclical Unemployment

Unemployment attributed to the cyclical trends in the economy, typically increasing during recessions and decreasing during expansions.

Recovery Phase

A stage in the economic cycle where economic activity picks up and GDP starts to rise again after a period of decline or recession.

Prosperity Phase

A stage of the business cycle in which economic activity is growing, leading to higher levels of employment, income, and production.