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

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Definitions:

Secured Creditor

A lender that has the right to claim specific assets of the borrower as repayment in case of default.

Director's Control

The authority and power held by a company's board director(s) to guide and manage the organization's operations and policies.

Report as to Affairs

A document that provides a financial snapshot of a company's assets and liabilities, typically used in insolvency proceedings.

Secured Creditors

Creditors who have a legal right or interest, typically through a lien, in the debtor's assets to secure repayment of their credit.