A Homemade Dividend Is a Dividend

question 265

Multiple Choice

A homemade dividend is a dividend:

• A) Created by adding options to an equity position.
• B) Paid on convertible bonds.
• C) Created by an investor who purchases shares prior to the ex-dividend date and resells the shares on the ex-dividend date.
• D) Created by an investor who is revising the dividends paid by the issuer by either selling shares of stock or reinvesting dividends.
• E) Paid in shares of stock rather than in cash.

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Definitions:

Pretax Income

The amount of income a company generates before any taxes are deducted, also known as earnings before taxes (EBT).