What Effect Does a Stock Dividend Have on the Book

question 101

Multiple Choice

What effect does a stock dividend have on the book and market values of the firm?

• A) Book value increases; market value increases
• B) Book value increases; market value decreases
• C) Book value decreases; market value increases
• D) Book and market values remain constant

---

Definitions:

Liberal Economist

An economist advocating for policies promoting free market principles, minimal government intervention, and individual liberties in economic matters.

Government Spending Cuts

Government Spending Cuts involve the reduction of public sector expenditure in an attempt to balance budgets and reduce deficits.

Multiplier

In economics, it refers to the factor by which gains in total output are greater than the change in spending that caused it.

GDP

The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.