Dividend Reinvestment Schemes Are a Significant Source of Equity for Many

question 13

Multiple Choice

Dividend reinvestment schemes are a significant source of equity for many Australian companies.Which of the following advantages of dividend reinvestment schemes may,at times,also be regarded as a disadvantage?

• A) The shareholder avoids transaction costs on the share issue.
• B) The share issue price is usually at a discount to the average market price.
• C) Such schemes allow dividends to be paid while retaining cash for future growth.
• D) The company is able to pass on franking credit to its shareholders.

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Definitions:

Internal Control

Systems and processes implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Unnumbered Checks

Unnumbered checks are checks that do not have a pre-printed sequential number, potentially raising security and tracking concerns within financial transactions.

Reference Source Documents

Original documents that provide evidence and details of business transactions, used for accounting and auditing purposes.

On-line Banking

The provision of banking services over the internet, allowing users to conduct financial transactions remotely.