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.

---

Definitions:

Cost Reduction

Refers to strategies and actions a company undertakes to decrease its total expenses and improve profitability.

Incremental Sales

The additional sales generated from a specific marketing campaign, promotional offer, or product launch, distinguishing these sales from the base level of sales.

Required Return

The minimum rate of return an investor expects to receive from an investment, considering the risk involved.