Trading & MarketsQuestion 100 of 125
A stock dividend (as opposed to a cash dividend) results in:
a.A cash payment to shareholders
b.A reduction in the number of shares outstanding
c.An increase in the company's total equity
d.Additional shares to shareholders, lowering the per-share cost basis while total basis stays the same
Explanation
A stock dividend distributes additional shares rather than cash, increasing the share count while proportionally lowering the per-share cost basis; the shareholder's total cost basis and total value are unchanged. It does not by itself increase the company's total equity, merely reclassifying amounts within equity.
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