McDaniel Corporation Had Net Income for 2016 of $75,000

question 30

Multiple Choice

McDaniel Corporation had net income for 2016 of $75,000.McDaniel had 6,000 shares of common stock outstanding at the beginning of the year and 22,000 shares of common stock outstanding at the end of the year.There were 8,000 shares of preferred stock outstanding all year.During 2016,McDaniel declared and paid preferred dividends of $26,000.On December 31,2106,the market price of McDaniel's common stock is $45 per share and the market price of its preferred stock is $73 per share.What is McDaniel's price/earnings ratio? (Round the answer to two decimal places. )

• A)12.86
• B)20.86
• C)13.20
• D)13.63

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Definitions:

Forward Rate

An agreed-upon rate for a financial transaction that will occur at a future date.

Annual Coupon Bond

A bond that pays interest to the holder annually until maturity, when the face value is also paid back.

Face Value

The maturity value of a bond. Also known as par value of bond.

Yield Curve

A graph showing the relationship between bond yields and their maturity dates, which can indicate economic expectations.