A Homemade Dividend Is a Dividend

question 265

Multiple Choice

A homemade dividend is a dividend:

• A) Created by adding options to an equity position.
• B) Paid on convertible bonds.
• C) Created by an investor who purchases shares prior to the ex-dividend date and resells the shares on the ex-dividend date.
• D) Created by an investor who is revising the dividends paid by the issuer by either selling shares of stock or reinvesting dividends.
• E) Paid in shares of stock rather than in cash.

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Definitions:

Inventory Flow

The process by which inventory moves through a business, from purchase and storage to sale.

Periodic Inventory System

An inventory accounting system where updates to inventory accounts occur at specific intervals, typically at the end of an accounting period.

LIFO

An inventory valuation method where the last items added to inventory are considered the first ones sold during a period of time; stands for Last-In, First-Out.

FIFO

An accounting method for inventory valuation where the first items acquired are the first ones sold, standing for First In, First Out.