Which of the Following Statements Is Correct

question 14

Multiple Choice

Which of the following statements is correct?

• A)The dividend yield and earnings per share both have the same denominator.
• B)The dividend yield and earnings per share both have the same numerator.
• C)Dividends per share are used in calculation of both earnings per share and dividend yield.
• D)Net income is used in the calculation of earnings per share but not in the calculation of dividend yield.

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Definitions:

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or retained rather than distributed to shareholders as dividends, often used for reinvestment in the business or to pay down debt.

Cumulative Preferred Stock

A type of preferred stock where dividends accrue and must be paid out before dividends can be distributed to common stockholders.

Par Common Stock

The nominal or face value assigned to a share of common stock, which has relevance in corporate accounting.

Par Value

A nominal value assigned to a stock or bond, representing its face value rather than its market value.