Exhibit 5-12

question 39

Multiple Choice

Exhibit 5-12.According to a Department of Labor report,the city of Detroit had a 20% unemployment rate in May of 2011 (Bureau of Labor Statistics,May,2011) .Eight working-age residents were chosen at random. Refer to Exhibit 5-12.What was the expected number of unemployed residents,when eight working-age residents were randomly selected?

• A)1.0
• B)1.6
• C)2.0
• D)6.4

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Definitions:

Compromise Dividend Policy

An approach to dividend disbursement that attempts to balance the interests of shareholders preferring regular dividends with those favoring reinvestment of profits.

Positive Net Present Value

Indicates that the present value of future cash flows from an investment exceeds the initial investment cost, suggesting profitability.

Debt-Equity Ratio

A measure of a company's financial leverage, calculated by dividing its total liabilities by its shareholder equity.

Stock Repurchase

A company's buying back of its own shares from the marketplace, reducing the number of outstanding shares and often increasing shareholder value.