Return on Equity Is Calculated as Net Income Divided by Average

question 10

True/False

Return on equity is calculated as net income divided by average stockholders' equity.

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Definitions:

Reverse Stock Split

A corporate action in which a company reduces the total number of its outstanding shares to increase its share price.

Par Value

The face value of a bond or stock as stated by the issuing company, not necessarily its market value.

Clientele Effect

A theory suggesting that changes in dividend policy may attract different groups of investors based on their preferences for dividend payouts versus capital gains.