What Is the Economic Difference Between a Stock Dividend and a Stock

question 130

Multiple Choice

What is the economic difference between a stock dividend and a stock split?

• A) Stock splits create greater economic benefits to shareholders than stock dividends.
• B) Stock splits increase EPS more than stock dividends.
• C) There is no economic difference between a stock dividend and a stock split.
• D) Stock dividends create greater economic benefits to shareholders than stock splits.

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Definitions:

Pounds

A unit of weight commonly used in the United States and the British imperial system, equal to 0.453592 kilograms.

Producer Surplus

The difference between the amount that producers are willing and able to sell a good for and the actual amount they receive.

Perfectly Inelastic

Describing a situation where the quantity demanded or supplied does not change regardless of changes in price.

Market Supply

The total quantity of a specific good or service that is available for purchase in the market by all suppliers at various price levels.