ABC Declared and Paid Cash Dividends to Its Common Shareholders

question 11

Multiple Choice

ABC declared and paid cash dividends to its common shareholders in January of the current year. The dividend:

• A) Will be added to the numerator of the earnings per share fraction for the current year.
• B) Will be added to the denominator of the earnings per share fraction for the current year.
• C) Will be subtracted from the numerator of the earnings per share fraction for the current year.
• D) Has no effect on the earnings per share for the coming year.

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Definitions:

Limit Sell Order

An instruction to sell a security at a specified price or better, ensuring that the sell price is no lower than what the seller has defined.

Gains

The monetary increase in value of an asset or investment over its purchase price.

Maximum Possible Gain

The highest profit that can be achieved in an investment.

SEC Rule 415

Known as "shelf registration," this SEC rule allows companies to register a new issue of securities without selling the entire issue at once.