Which of the Following Is True

question 5

Multiple Choice

Which of the following is true?

• A) A 10% stock dividend would increase stockholder wealth by $5 if the current price of stock is $50 (ignoring transaction costs).
• B) Stock dividends are not true dividends.
• C) Stock splits involve a small increase (splintering) in total stock outstanding.
• D) The most common dividend policy involves regular cash payments with year-end bonuses.

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Definitions:

Duress

A situation in which someone performs an act as a result of violence, threat, or other pressure against the person.

Fraud

The intentional deception or misrepresentation made by one party to gain an unfair advantage or harm another party.

Innocently Misrepresented

A situation where a false statement is made without knowledge of its falseness, usually without intent to deceive, but leading another to enter into a contract.

Full-blooded Pomeranian

A dog that is purely of the Pomeranian breed, without any mixed lineage.