Which of the Following Is the Best Definition of a Stock

question 93

Multiple Choice

Which of the following is the best definition of a stock dividend?

• A) Payment made by a firm to its owners in the form of stock, diluting the value of each share outstanding.
• B) Procedure where a firm's number of shares outstanding is reduced.
• C) Policy where a firm pays dividends only after meeting its investment needs while maintaining a desired debt-to-equity ratio.
• D) Another method used to pay out a firm's earnings to its owners, which provides more preferable tax treatment than dividends.
• E) Cash payment made by a firm to its owners in the normal course of business, usually made four times a year.

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Definitions:

U.S. Constitution

The foundational document of the United States government, outlining the nation's fundamental laws and principles along with the structure of its government.

Restatements

Publications that endeavor to distill the common law and its application into a series of principles or rules, prepared by the American Law Institute.

Common Law Doctrines

Legal principles that have developed over time through the decisions of courts rather than through legislative statutes or executive branch action.

The U.S. Constitution

The foundational document of the United States, outlining the framework for the federal government and enumerating individual rights.