Martin Corp

question 17

Multiple Choice

Martin Corp.permits any of its employees to buy shares directly from the company through payroll deduction.There are no brokerage fees and shares can be purchased at a 10% discount.During 2016,employees purchased 8 million shares;during this same period,the shares had a market price of $15 per share at the end of the year.Martin's 2016 pretax earnings will be reduced by:

• A)$ 0.
• B)$ 12 million.
• C)$108 million.
• D)$120 million.

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Definitions:

Weighted Average

This is an average in which each quantity to be averaged is assigned a weight, reflecting its importance.

Variances

Statistical measures that represent the degree of spread or dispersion of a set of values around their mean, commonly used to quantify risk in finance.

Covariances

Indicators of how two or more variables are related and move together.

Capital Allocation Line

A graph line that shows the risk-return trade-off for efficient portfolios, indicating the rate of return for each unit of risk.