A Payment Made by the Firm to Its Owners in the Form

question 206

Multiple Choice

A payment made by the firm to its owners in the form of new shares of stock, rather than cash, is called a(n) _______________ dividend.

• A) Stock.
• B) Normal.
• C) Special.
• D) Extra.
• E) Liquidating.

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Definitions:

Multifactor Model

Model of security returns positing that returns respond to several systematic risk factors as well as firm-specific influences.

Explanatory Power

The ability of a statistical model to account for the variance in a given data set, explaining how well the model fits or predicts the outcomes.

Security Returns

The gains or losses from investing in a financial security, calculated based on the change in investment value and any income from the investment, like dividends.

Systematic Factors

Factors that affect the entire market or a large segment of the market, such as economic, political, or social changes.