Downtown Deli Has 2,000 Shares of Stock Outstanding with a Par

question 28

Multiple Choice

Downtown Deli has 2,000 shares of stock outstanding with a par value of $1 per share and a market value of $26 per share.The balance sheet shows $2,000 in the common stock account,$9,500 in the capital in excess of par account,and $14,500 in the retained earnings account.The firm just announced a stock dividend of 75 percent.What is the market value per share after the dividend?

• A)$36.00
• B)$14.86
• C)$45.50
• D)$13.50
• E)$12.00

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Definitions:

Real Output

The quantity of goods and services produced in an economy, adjusted for inflation, reflecting the actual productivity.

Expected Inflation Rate

The anticipated rate at which the general level of prices for goods and services will rise over a period.

Velocity of Money

The rate at which money circulates in the economy, typically measured as the ratio of nominal GDP to the money supply.

Actual Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling, as measured over a specific period of time.