A Corporation May Issue a Stock Dividend for Which of the Following

question 62

Multiple Choice

A corporation may issue a stock dividend for which of the following reasons?

• A) May want to increase permanent capital in the business
• B) May want to decrease market value
• C) May be short of cash and unable to pay a cash dividend
• D) All of the above are correct.

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Definitions:

Investing

The act of allocating resources, usually money, in the expectation of generating an income or profit.

Price Per Share

The value of a single share of a company's stock, determined by the market.

Death-spiral Financing

A financing arrangement typically involving the issuance of convertible securities with an adjustable conversion rate, which can lead to the dilution of existing shareholders' equity.

Preferred Shareholders

Investors who own preferred shares in a company, granting them priority over common shareholders for dividends and assets distribution, particularly in liquidation.