Which of the Following Is NOT a Feature of a Dividend

question 34

Multiple Choice

Which of the following is NOT a feature of a dividend reinvestment scheme for a company?

• A) Shareholders can acquire company shares at little or no transaction cost.
• B) Shareholders can increase their return on the company share concerned.
• C) The company can obtain additional equity funding.
• D) The shareholders can redeem shares for dividends.

---

Definitions:

Proportionate Ownership

The share of ownership in a company or property based on the percentage of shares or units held relative to the total outstanding.

Shareholder's Wealth

The value of a company to its shareholders, often measured by the price of its shares multiplied by the number of shares outstanding.

Stock Split

A change in the number of shares outstanding by issuing new shares in proportion to those already owned. All stockholders’ proportionate ownership is maintained, and no economic value is created. Used to keep stock prices within a desirable trading range.

Maximum Cash Dividend

The highest dividend payment a company can make, determined by its current earnings and reserve cash levels, without compromising its financial stability.