Which of the Following Internal Characteristics Should Cause Investors to Expect

question 122

Multiple Choice

Which of the following internal characteristics should cause investors to expect the highest rate of return?

• A)a steady record of past dividends
• B)interest and principal guaranteed by the U.S.government
• C)a record of excellent management and consistent dividend payments
• D)poor management and excessive use of debt financing

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Definitions:

Stated Value

A value assigned to a corporation's stock for accounting purposes, which may bear no relation to the market value.

Shares

Units of ownership interest in a corporation or financial asset that provide a share in the corporation's profits and a claim on its assets.

Paid-In Capital

The total amount of money raised by a company through the sale of shares to the shareholders, including additional amounts over the nominal value.

Issue Price

The price at which new securities are sold to the public or investors by the issuer when they are first offered.