Cambridge Corp. declared a 5% stock dividend. Will Wales owned 300 shares of Cambridge before the dividend. Cambridge shares were trading at $21 before the dividend. Which of the following will be true after the dividend is distributed?
A) The total market value of Will's shares was $6,300 before the stock dividend but will probably decrease after the stock dividend.
B) The total market value of Will's shares was $6,300 before the stock dividend and $6,615 after the stock dividend.
C) Will owned 300 shares before the stock dividend and 315 shares after the stock dividend.
D) Fewer investors will be able to buy Cambridge shares.

Question

Quizplus · Accepted Answer

After a 5% stock dividend, Will's shares increase by 5% from 300 to 315 shares. The market value per share may adjust, but the number of shares increases by 5%.