A Distribution to Stockholders in the Form of Stock Is

question 108

Multiple Choice

A distribution to stockholders in the form of stock is called a:

• A) stock dividend.
• B) stock split.
• C) stock conversion.
• D) cash dividend.

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Definitions:

Residual Dividend

A policy whereby dividends are based on earnings after all projects with positive NPV are funded.

Capital Budgeting Projects

Long-term investment decisions made by companies to invest in projects or assets with the aim of generating revenue or reducing costs in the future.

Dividend Distribution

Dividend distribution refers to the payment a company makes to its shareholders out of its profits or reserves, usually in the form of cash or additional shares.

Target Capital Structure

The optimal mix of debt, equity, and other financing sources a firm aims to achieve to minimize its cost of capital.