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A company has 1,000 shares of $100 par preferred stock. It also has 25,000 shares of common stock outstanding, and its total stockholders' equity equals $500,000. The book value per common share is:

a)            $ 15.38.

b)            $ 16.00.

c)            $ 19.23.

d)            $ 20.00.

e)            $100.00.


12.          Stock options are often used to encourage employees to:

a)            Focus on company performance.

b)            Take a long-run approach.

c)            Remain with the company.

d)            To help save for retirement by participation in profit-sharing plans.

e)            All of these.



13.          A corporation is a legal entity separate from its owners.

a)            True

b)            False


14.          Net profit margin reflects the percent of net income in each dollar of net sales.

a)            True

b)            False


15.          Foreign exchange rates fluctuate due to changes in :

a)            Political conditions.

b)            Economic conditions.

c)            Supply and demand for currencies.

d)            Expectations of future events.

e)            All of these.


16.          Equity securities reflect a creditor relationship such as investments in notes, bonds, and certificates of deposit.

a)            True

b)            False


17.          A company should report its portfolio of trading securities at its market value.

a)            True

b)            False


18.          Investments in trading securities are always short-term investments.

a)            True

b)            False


19.          A company had a profit margin of 10.5% and total asset turnover of 1.84. Its return on total assets was:

a)            5.71%

b)            8.66%

c)            12.34%

d)            13.61%

e)            19.32%


20.          A company had net income of $2,660,000, net sales of $25,000,000, and total assets of $8,000,000. Its return on total assets equals:

a)            3.01%.

b)            10.64%.

c)            32.00%.

d)            33.25%.

e)            300.75%.


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