QUESTIONS WITH ACCURATE
ANSWERS
◉ How might a privately held company define shareholder value
differently from a publicly held company?
Answer: Privately held companies may value keeping the business
within the family
◉ What effect does a current devaluation have on a country's
international trade?
Answer: it makes a country's exports cheaper internationally
- devaluation reduces the price of a country's goods and services abroad,
making exports more competitive while potentially increasing the
volume of exports
◉ How does global financing integration benefit corporations?
Answer: it provides access to wider range of funding sources and
investment opportunities
◉ What is an auction market in secondary financial markets?
Answer: a market that operates where prices are determined by the
highest bidder
, ◉ Why are efficient, well-developed financial markets important for
stock pricing?
Answer: they produce more reliable stock prices
◉ Talia is considering purchasing a small, local construction company.
When reviewing the financials, she notices that although the company
produced $200,000 in net income during the last year, the retained
earnings increased only by $50,000.
Which scenario would explain why the change in retained earnings from
the previous year did not increase by the total income earned?
Answer: the remaining earnings were paid out as dividends to
shareholders
- change in retained earnings is calculated as net income - dividends.
This relationship indicates that net income is either distributed as
dividends or contributes to a change in the retained earnings of the
company
◉ What does retained earnings represent in the equity section of the
balance sheet?
Answer: The cumulative total of earnings not paid out as dividends to
stockholders
- RE: the earnings that the company has accumulated and retained over
its entire history to finance the firms asset based