Which of the Following Is Not True About a Stock

question 3

Multiple Choice

Which of the following is not true about a stock dividend?

• A)With a stock dividend,the firm issues a percentage of outstanding stock as new shares to existing shareholders.
• B)The overall effect of a stock dividend is to leave total stockholders' equity and each owner's share of stockholders' equity unchanged.
• C)In theory,with a stock dividend,total market value considering all outstanding shares should not change.
• D)Since the number of shares changes under a stock dividend,any ratio based on the number of shares must be restated.
• E)The accounting for a stock dividend,assuming the distribution is relatively small,requires that the par value of the stock be removed from retained earnings.

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Definitions:

Slave Trade

The historical practice of buying, selling, and transporting enslaved individuals, especially prevalent in the Atlantic world from the 16th to the 19th century.

Royal Families

Dynastic families who traditionally rule a country as monarchs, often passing leadership from one generation to the next.

Mercantilism

An economic theory and practice, dominant in Europe from the 16th to 18th centuries, that advocated government regulation of a nation’s economy for the purpose of augmenting state power at the expense of rival national powers.

National Wealth

The total value of all economic assets owned by a country, including natural resources, capital goods, and human capital, minus its liabilities.