Which of the following is not a reason why a company might issue a stock dividend ...

By Investopedia Staff AAA
Q:

Which of the following is not a reason why a company might issue a stock dividend:
a) To show that the company is performing well.
b) To give stockholders a nontaxable distribution.
c) To increase the shares outstanding, while keeping the price per share low enough to attract small investors.
d) All of these are reasons.
e) None of these are reasons.

A:

The correct answer is d.
All of these are reasons for a company to issue a stock dividend, remember that this differs from cash dividends. Candidates always get tricked by reading the question too fast and mistaking a stock dividend for a cash dividend.

Have a Financial Question?

RELATED FAQS

  1. Who benefits the most from prepaid expenses?

    Learn who benefits most when expenses are prepaid. Individuals and businesses often make payments, such as rent or insurance, ...
  2. If I am looking to get an Investment Banking job. What education do employers prefer? ...

    If you are looking specifically for an investment banking position, an MBA may be marginally preferable over the CFA. The ...
  3. Can I still pass the CFA Level I if I do poorly in the ethics section?

    You may still pass the Chartered Financial Analysis (CFA) Level I even if you fare poorly in the ethics section, but don't ...
  4. 12b-1 fees in mutual funds, are known as “asset-based distribution charges,” ...

    The correct answer is b. To initiate 12b-1 fee charges in a mutual fund, there must be a majority vote by the full board ...
RELATED TERMS
  1. Personal Financial Advisor

    Professionals who help individuals manage their finances by providing ...
  2. CFA Institute

    Formerly known as the Association for Investment Management and ...
  3. Chartered Financial Analyst - CFA

    A professional designation given by the CFA Institute (formerly ...
  4. Security Analyst

    A financial professional who studies various industries and companies, ...

You May Also Like

Related Articles
  1. No results found.
Trading Center