Trading, Accounts & Prohibited ActsQuestion 219 of 398
How does a stock dividend differ from a cash dividend for a shareholder?
a.A stock dividend pays additional shares and lowers the cost basis per share, while a cash dividend pays money
b.A stock dividend is always taxed immediately, while a cash dividend never is
c.A stock dividend reduces the number of shares owned
d.A stock dividend can only be paid by bond issuers
Explanation
A stock dividend distributes additional shares rather than cash; the shareholder owns more shares, and the cost basis per share is reduced so total basis stays roughly the same. A cash dividend distributes money to shareholders.
Practice all 398 questions free — no signup required.
Related questions on this topic
- In equity trading, a standard 'round lot' of common stock is generally how many shares?
- A stock is trading at $48. An investor believes that if it breaks above $52 it will continue climbing, and wants to buy automatically at that point. Which order accomplishes this?
- Which self-regulatory organization is chiefly responsible for regulating broker-dealers and the over-the-counter securities market in the United States?
- A dealer quotes stock XYZ at $15.20 - $15.35. At what price would a customer's market order to sell be executed?
- Which statement about a forward stock split is TRUE?
- An investor enters a limit order and specifies that it should remain in effect until it executes or is canceled, even across multiple trading days. This is known as what type of order?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review