D351 Functions of Human Resource Management - Set 2 - Part 3

Correct Answer: $200,000

Dividend payout = Dividend payout ratio Net income. In this case: 40% $500,000 = $200,000.

Correct Answer: To reinvest in the company for future growth

Retained earnings are the portion of net income not distributed as dividends and are reinvested in the business.

Correct Answer: The stock is more volatile than the market

A beta of 1.5 indicates that the stock is 50% more volatile than the market, meaning its price moves more than the markets average movement.

Correct Answer: The risk that affects the entire market or economy

Systematic risk is market-wide risk that cannot be eliminated through diversification, such as interest rate changes or economic recessions.

Correct Answer: The required return necessary to make a capital budgeting decision

Cost of capital is the minimum return that a company must earn on its investments to cover the cost of raising funds.

Correct Answer: A factory

Real assets include physical items like buildings, land, and equipment, while financial assets include stocks and bonds.

Correct Answer: A company acquires another company using a significant amount of debt

In a leveraged buyout, a company is acquired using a substantial amount of borrowed funds, with the expectation that the acquired companys cash flow will be used to repay the debt.

Correct Answer: Use dividends to purchase additional shares of stock

A DRIP allows shareholders to reinvest their dividends into more shares of the companys stock, often at no extra cost.

Correct Answer: Investors prefer liquid, cash like investments

Liquidity preference suggests that investors prefer assets that can easily be converted into cash, especially in uncertain economic times.

Correct Answer: 20

P/E ratio = Market price per share / Earnings per share (EPS). In this case: $100 / $5 = 20.