Which of the Following Occurs When a Corporation's Board of Directors

question 96

Multiple Choice

Which of the following occurs when a corporation's board of directors distributes a 10% stock dividend?

• A) Retained earnings will be credited for the new shares times the current market value of the stock.
• B) Retained earnings will be debited for the new shares times the current market value of the stock.
• C) Retained earnings will be debited for the new shares times the par value of the stock.
• D) Retained earnings will be credited for the new shares times the par value of the stock.

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Definitions:

Constant Dividend

A cash payout policy where a company pays a fixed amount of dividend to its shareholders over time.

Rate of Return

The increase or decrease in the value of an investment during a set timeframe, shown as a percent of the investment's starting value.

Annual Dividend

The total amount of dividends that a company pays to its shareholders over a year, per share.

EPS Growth Rate

The rate at which a company's earnings per share (EPS) has grown or is expected to grow over a specified period.