The Owner of 100 Shares of Stock of a Corporation

question 21

Multiple Choice

The owner of 100 shares of stock of a corporation with 2,000 shares of stock outstanding has a 5% interest in the total stockholders' equity. If a 20% stock dividend is declared and distributed a 5% interest in the total stockholders' equity prior to the stock dividend, would have which of the following interests in the equity after the stock dividend was distributed?

• A) 5%
• B) 6%
• C) 20%
• D) 25%

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Definitions:

Subject Matter

The topic or substance of a discussion, document, or work, especially in legal contracts or litigation.

Sold

The completed process of transferring ownership of a good or property in exchange for money or value.

Invitation to Treat

An invitation for parties to make offers or negotiate, which itself does not bind the parties to a contract.

Newspaper Offer

A promotional or sales offer made through a newspaper, typically involving products or services at discounted rates.