What Are Dividend Payments

question 25

Multiple Choice

What are dividend payments?

• A)payments made to a company by investors for a share of the ownership of that company
• B)incremental increases in the value of the stock held by an investor due to rises in share price
• C)the difference between the original cost price of a share and the price an investor receives when that share is sold
• D)a part share of the profits or earnings of a company paid to each shareholder on the basis of the number of shares they hold
• E)periodic payments to the bondholders

---

Definitions:

Residual Income

The amount of income that an entity generates after accounting for the cost of capital, indicating profitability beyond the minimum required return.

Investment Opportunity

A potential financial venture or asset that could generate income or appreciate in value over time.

Combined

Refers to the amalgamation or integration of two or more elements into a single unit or system.

Minimum Required Return

The lowest acceptable rate of return on an investment, often determined by the investor's cost of capital.