What Would Be the Effect on Book Value Per Share

question 34

Multiple Choice

What would be the effect on book value per share and earnings per share if a corporation purchased its own shares in the open market at a price greater than the book value per share?

• A) Increase both book value per share and earnings per share
• B) Decrease both book value per share and earnings per share
• C) Decrease book value per share and increase earnings per share
• D) No effect on book value but increase earnings per share

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Definitions:

SRS

Simple Random Sampling, a method of sampling where every individual has an equal chance of being selected from a population.

T Procedure

A statistical method used to infer the unknown mean of a population based on a sample mean, especially when the sample size is small.

Non-Normality

A characteristic of a dataset that deviates from the bell-shaped curve associated with a normal distribution, potentially affecting statistical tests.

Skewness

Skewness is a measure of the asymmetry of the probability distribution of a real-valued random variable about its mean, indicating how much the distribution leans towards the left or right.