Which of the Following Statements Regarding Dividends Is True

question 62

Multiple Choice

Which of the following statements regarding dividends is true?

• A)Some companies do not pay dividends even when the company is profitable.
• B)Stock dividends immediately increase the total value of the stockholders' investment.
• C)Cash dividends and stock dividends both decrease total stockholders' equity.
• D)A corporation has a legal obligation to pay dividends each year.

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Definitions:

American Express

A multinational corporation specialized in payment card services, known for its credit card, charge card, and traveler's cheque businesses.

Consumer Credit Contract

A legal agreement between a borrower and a lender in which the borrower receives something of value now and agrees to repay the lender at a future date, usually with interest, under specified conditions.

Rights

Entitlements or privileges legally guaranteed to individuals or entities, underpinning their ability to perform or refrain from certain actions.

Negotiable Instrument

A signed document that promises payment to a specified person or assignee.