Stock in Synergistic Corporation Is Selling at $20 Per Share

question 130

Multiple Choice

Stock in Synergistic Corporation is selling at $20 per share.It had earnings of $4 a share and a dividend yield of 4 percent.What is the dividend?

• A) $0.04
• B) $0.20
• C) $1.00
• D) $120

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Definitions:

Debt/Equity Ratio

A ratio exemplifying the balance of equity to debt in the financing structure for a company’s assets.

Interest Tax Shield

A deduction allowed for the interest paid on debt, thereby reducing taxable income and the total tax owed.

M&M Proposition I

outlines that in a perfect market, without taxes and transaction costs, a company's value is unaffected by its capital structure.

Direct Bankruptcy Costs

The expenses incurred by a company when going through the process of declaring bankruptcy, including legal fees, accounting fees, trustee fees, and other associated administrative expenses.