Finra Exam Series-7 Topic 3 Question 84 Discussion

Actual exam question for Finra's Series-7 exam

Question #: 84
Topic #: 3

The Bubba Corporation has 900,000 of common outstanding and holds 100,000 shares as treasury stock. At the end of the third quarter $450,000 is distributed as a dividend on the common.

How much is the dividend per share?

A$0.45

B$0.50

C$2.00

D$2.22

Show Suggested Answer

Suggested Answer: A

$0.45. Since treasury stock does not receive dividends, divide $450,000 by the outstanding 100,000 shares to arrive at $0.45 per share.

by Shonda at Apr 14, 2024, 03:32 PM

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Yolando

5 months ago

So, the correct answer is B) $0.50 then

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Arlean

5 months ago

I believe the dividend per share is $0.50 as well, since $450,000 is distributed on the common shares

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Florinda

6 months ago

With 900,000 common outstanding shares, the dividend per share should be $0.50

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Jettie

6 months ago

I agree, let's find out the correct answer

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Yolando

6 months ago

I think we need to calculate the dividend per share

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Malcom

6 months ago

I think the dividend per share is $0.50 because we have to consider only the outstanding shares, not the treasury stock.

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Lili

6 months ago

Actually, I believe the dividend per share is $2.00.

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Pauline

7 months ago

I agree with The dividend per share should be $0.50.

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Alysa

7 months ago

I think the dividend per share is $0.50.

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Amos

8 months ago

Okay, I think I've got it now. This is a straightforward dividend calculation, and the treasury stock doesn't affect the result. I'm feeling more confident about this question.

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Good point. Treasury stock is not considered outstanding, so we should only use the 900,000 shares of common stock that are actually out there. The calculation would be the same: $450,000 / 900,000 = $0.50 per share.

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Natalie

8 months ago

I agree with the calculation, but I'm a bit concerned about the wording of the question. It mentions that the company holds 100,000 shares as treasury stock. Do we need to factor that into the equation somehow?

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Anjelica

8 months ago

That's right! So, the calculation would be $450,000 / 900,000 shares = $0.50 per share. The answer is B) $0.50.

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Dorian

8 months ago

Okay, let's think this through. We have 900,000 shares of common stock outstanding, and the company is distributing $450,000 as a dividend. To find the dividend per share, we need to divide the total dividend amount by the number of outstanding shares.

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Wilford

8 months ago

Hmm, this question seems straightforward, but I want to make sure I understand it correctly. Can someone walk me through the steps to solve this problem?

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Lelia

6 months ago

That's correct. The closest option to $0.5625 is $0.50, so the correct answer must be B) $0.50.

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Albina

6 months ago

If we divide $450,000 by 800,000 shares, we get $0.5625 per share.

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Edgar

6 months ago

Right, we made an error. Let's correct it and find the correct dividend per share.

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Renea

6 months ago

That gives us $0.5625 per share, which is not listed as an option. We made a mistake.

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Lelia

6 months ago

Next, we divide the total dividend of $450,000 by the remaining shares.

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Albina

6 months ago

So, 900,000 total outstanding shares minus 100,000 treasury shares equals 800,000 shares.

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Edgar

7 months ago

First, we need to subtract the treasury stock from the total outstanding shares.

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Finra Exam Series-7 Topic 3 Question 84 Discussion

Contribute your Thoughts:

Yolando

Arlean

Florinda

Jettie

Yolando

Malcom

Lili

Pauline

Alysa

Amos

Kate

Natalie

Anjelica

Dorian

Wilford

Lelia

Albina

Edgar

Renea

Lelia

Albina

Edgar