Shown Below Is Information Relating to the Shareholders' Equity of Brookdale

question 49

Multiple Choice

Shown below is information relating to the shareholders' equity of Brookdale Corporation at December 31, 2010:
$\begin{array} { l r } 11 \% \text { non-cumulative preference share, } \$ 130 \text { par, 100,000 shares authorized, } & \$ 1,300,000 \\10,000 \text { shares issued } & \\\text { Ordinary shares, } \$ 1.25 \text { par, } 1,000,000 \text { shares authorized, } 600,000 \text { shares } & 750,000 \\\text { issued (of which } 6,000 \text { are held in treasury ) } & \\\text { Share premium: preference shares } & 500,000 \\\text { Share premium: ordinary shares } & 900,000 \\\text { Share premium: treasury share transactions } & 6,000 \\\text { Treasury shares (at cost: } 6,000 \text { ordinary shares) } & ( 192,000 ) \\\text { Retained earnings } & 1,350,000 ) \end{array}$

-Refer to the above data. What was the average issue price per share of ordinary share?

• A) $2.75.
• B) $1.25
• C) $1.50.
• D) $3.75.

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Definitions:

Diversified Portfolio

An investment portfolio that contains a mix of assets (e.g., stocks, bonds, real estate) to reduce risk through diversification.

Market Portfolio

A portfolio consisting of all stocks.

Correlation

A statistical measure that describes the extent to which two variables change together, and thus how well one variable can predict the other.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, often used in financial metrics like WACC.