A Liquidating Dividend

question 109

Multiple Choice

A liquidating dividend:

• A)Occurs when a corporation distributes shares of its own stock as a dividend,rather than cash.
• B)Occurs whenever a corporation distributes non-cash assets as a dividend to its stockholders.
• C)Represents a distribution of a corporation's profits to the stockholders.
• D)Represents a return of invested capital to a corporation's owners,the stockholders.

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Definitions:

Efficient Frontier

A graphical representation in modern portfolio theory showing the set of optimal portfolios that offer the highest expected return for a defined level of risk or vice versa.

Firm-specific Risk

The risk associated with an individual company, distinct from market risk, that can affect the company's stock price.

Diversifiable Risk

The portion of investment risk that can be reduced or eliminated through diversification in an investment portfolio.

Unique Risk

Another term for diversifiable risk, emphasizing the idea that this risk is specific to an individual investment and not the market as a whole.