A Firm Issues a 100% Stock Dividend

question 30

Multiple Choice

A firm issues a 100% stock dividend.This transaction is equivalent to a:

• A)3:2 stock split.
• B)1:2 stock split
• C)100:1 stock split
• D)1:1 stock split
• E)2:1 stock split

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Definitions:

Residual Income

The income that remains after deducting all required costs of capital and operating expenses, indicating the net income generated beyond the minimum rate of return.

Division Performance

An evaluation of the effectiveness and productivity of a specific division or segment within a company, often measured against pre-set targets or industry standards.

Return On Investment

A measure of the profitability of an investment relative to its costs, commonly expressed as a percentage.

Operating Assets

Assets used by a company to generate revenue, typically including property, plant, and equipment, but excluding investments and inventories.