Once Properly Declared, the Effect of a Cash Dividend Is

question 19

Multiple Choice

Once properly declared, the effect of a cash dividend is:

• A) it is revocable until actually paid.
• B) that it is considered a debt the corporation owes to the shareholders.
• C) it imposes personal liability on the directors who vote for it.
• D) it imposes personal liability on the shareholders of a solvent corporation.

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Definitions:

Spin-off

A corporate action where a company "spins off" a section as a separate business, leading to the creation of a new independent company.

Merger

The combination of two or more companies into a single entity, where one survives and the others cease to exist.

White Knight

A friendly investor or company that acquires a corporation at fair consideration, often to prevent it from being taken over by a hostile party.

Corporate Takeovers

The process by which a company acquires control over another company, either through a direct purchase of shares or through other strategies.