A stock dividend provides a shareholder with more shares of stock but his or her percentage of ownership in the company, is no larger than before.

Question

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When a company issues a stock dividend, the total number of shares increases, but the value of each share decreases proportionally. As a result, a shareholder's percentage of ownership in the company remains the same, even though they may have more shares.

A Stock Dividend Provides a Shareholder with More Shares of Stock