Assume That a Firm Had Shareholders' Equity on the Balance

question 41

Multiple Choice

Assume that a firm had shareholders' equity on the balance sheet at a book value of $1,500 at the end of 2010.During 2011 the firm earns net income of $1,900,pays dividends to shareholders of $200,and issues new stock to raise $500 of capital.The book value of shareholders' equity at the end of 2011 is:

• A) $2,750
• B) $250
• C) $1,450
• D) $3,700

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Definitions:

System I Thinking

A term in psychology that refers to the fast, automatic, intuitive approach of decision-making, as opposed to slow, deliberate, analytical thinking.

Confirmation Bias

The habit of seeking out, understanding, preferring, and remembering data in a manner that validates one's already established views or theories.

Hypothesis Testing

A statistical method that is used in making statistical decisions using experimental data.

Selection Task Performance

A measure of cognitive function that involves choosing relevant pieces of information while ignoring irrelevant ones to complete a task.