What Effect Does a Stock Dividend Have on the Book

question 69

Multiple Choice

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

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

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Definitions:

Downsloping Curve

Typically refers to a demand curve in economics, indicating that as the price of a product decreases, the quantity demanded increases, and vice versa.

Price Lowering

Price lowering involves reducing the selling price of goods or services, often as a strategy to increase demand or competitiveness in the market.

Monopolist Demand

Monopolist demand refers to the total market demand faced by a monopolist, which is the sole provider of a good or service in the market, and thus faces the downward-sloping market demand curve directly.

Nondiscriminating Monopolist

A monopolist who charges the same price to all customers for a good or service, without price differentiation.