If a Company Issues 2,000 Shares for $55 and Then

question 87

Multiple Choice

If a company issues 2,000 shares for $55 and then repurchases 50 shares at $50 and subsequently purchase another 50 shares at $60 each,how much is in the account "contributed surplus on retirement of shares"?

• A)$250
• B)$0
• C)$107,250
• D)$110,000

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Definitions:

EPS

Earnings Per Share, a key indicator of a company's profitability, calculated by dividing the company's net income by its total number of outstanding shares.

DFL

Degree of Financial Leverage, a ratio measuring the sensitivity of a company's earnings per share to fluctuations in its operating income, due to changes in its capital structure.

Optimal Capital Structure

The most favorable blend of debt and equity financing that minimizes a company's cost of capital while maximizing its market value.

Stock Price

The current price at which a share of a company is traded on the stock market.