In the Following List, Which Three Factors Influence the Capital

question 9

Multiple Choice

In the following list, which three factors influence the capital gain component of a growth company? (1) The firm's expected rate of growth of earning per share
(2) The amount of capital invested in growth investments
(3) The rate of return earned on the funds relative to the required rate of return
(4) The required rate of return on the security based on its systematic risk
(5) The firm's dividend payout ratio
(6) The time horizon when these growth investments will be available

• A) (1), (3) and (5)
• B) (2), (3) and (4)
• C) (2), (3) and (6)
• D) (3), (4) and (5)
• E) (3), (4) and (6)

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Definitions:

Shares Outstanding

The total number of a company's shares of stock that are owned by shareholders, including those held by institutional investors and restricted shares held by insiders and company officers.

Market Price

The ongoing rate at which a service or asset is available for purchase or sale in the market.

Net Present Value

A financial metric that calculates the worth of a projected investment by discounting future cash flows to their present value.

Shareholders

Shareholders are individuals or entities that own shares of stock in a corporation, giving them partial ownership of the company.