1. Earnings per share (EPS) is calculated by:

a. dividing pretax income by the number of shares of common stock outstanding

b. dividing net profits after tax by the total number of preferred and common stock shares outstanding

c. dividing the dividends paid by the number of shares of common stock outstanding

d. dividing earnings available for common stockholders by the number of shares of common stock outstanding

.

2. Calculate the effective annual rate associated with a 7 percent stated rate that is compounded semi-annually.

a. 7.12%

b. 9.31%

c. 10%

d. 16.5%