Assume That a Firm Had Shareholders' Equity on the Balance

question 44

Multiple Choice

Assume that a firm had shareholders' equity on the balance sheet at a book value of $1,600 at the end of 2005. During 2006 the firm earns net income of $1,300, pays dividends to shareholders of $600, and uses $300 to repurchase common shares. The book value of shareholders equity at the end of 2006 is:

• A) $2,000
• B) $400
• C) $3,800
• D) $2,600

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Definitions:

Craft Unions

Labor unions that represent workers in specific trades or crafts, focusing on specific skill sets and professions.

Labor Demand Curves

Illustrates the relationship between the wage rate and the quantity of labor that employers are willing to hire, showcasing how changes in wages can affect employment levels.

Minimum Wage

The lowest legally permissible amount that workers can be paid by employers, usually set by government policy.

Principal-agent Problem

A conflict of interest that arises when one party (the agent) is expected to act in the best interest of another (the principal) but has incentives to act in their own interest.