Problem D-III — Stock Dividends and Stock Splits

question 67

Multiple Choice

Problem D-III — Stock Dividends and Stock Splits
Stock dividends and stock splits are common forms of corporate stock distribution to stockholders.

Consider each of the numbered statements. You are to decide whether it:
-The retained earnings available for dividends are increased.

• A)Applies to both stock dividends and stock splits.
• B)Applies to neither.
• C)Applies to stock splits only.
• D)Applies to stock dividends only.
• E)Applies to stock splits effected in the form of a dividend only.
• F)Applies to both stock splits effected in the form of a dividend and a stock dividend.
• (In each instance, the issuing company has only one class of stock.)
• Instructions
• Print next to the number of each statement below, the single capital letter of the description which applies to the statement.

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Definitions:

Frame Dependence

The influence of presentation or context on individuals' decision-making processes and perception.

Mental Accounting

The tendency of individuals to allocate money for specific purposes in separate mental accounts, affecting their spending and saving behavior.

Confirmation Bias

Confirmation bias is the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses, often leading to statistical errors in decision-making.