Which of the Following Statements Regarding Stock Dividends and Stock

question 97

Multiple Choice

Which of the following statements regarding stock dividends and stock splits is true?

• A) A two-for-one stock split is equivalent to a 50% stock dividend.
• B) A three-for-one stock split is equivalent to a 66% stock dividend.
• C) A three-for-two stock split is equivalent to a 100% stock dividend.
• D) A 50% stock dividend is equivalent to a three-for-two stock split.

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Definitions:

Investor

An individual or entity that allocates capital with the expectation of receiving financial returns, usually through stocks, bonds, or real estate.

Investee

The entity in which an investment is made, often subject to the influence or control of the investor through ownership of equity shares or other mechanisms.

Bargain Purchase

An acquisition where the purchase price is significantly less than the fair value of the net identifiable assets of the acquired company.

Deferred Tax Liability

A tax obligation that arises from temporary differences between the accounting and tax treatment of assets and liabilities which is expected to be settled in the future.