A Company Had the Following Stockholders Equity Information Available at Year

question 105

Essay

A company had the following stockholders equity information available at year end.
- issued 11,000 shares of $2.00 par value common stock for $12.00 per share
- issued 5,000 shares of $50 par value 6% preferred stock for $70 per share
- purchased 1,000 shares of previously issued common stock for $15.00 per share
-reported net income of $200,000
- declared and paid the preferred stock dividend
Calculate the earnings per share for the current year.

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Definitions:

Illusory Correlation

A cognitive bias where a relationship is perceived between two variables even when no such relationship exists.

In-group Favoritism

The tendency for people to give preferential treatment and show more positive attitudes towards members of their own group over those of an out-group.

Fundamental Attribution Error

The tendency for observers, when analyzing others' behavior, to underestimate the impact of the situation and overestimate the influence of personal characteristics.

Quizmaster Study

An experimental study that illustrates the attribution error by having participants rate quizmasters as more knowledgeable than contestants, ignoring the situational advantage of the quizmasters.