A shareholder who receives a stock dividend would
A) expect the market price per share to increase.
B) expect retained earnings to increase.
C) own more shares.
D) expect the legal capital of the shares to change.

Question

Quizplus · Accepted Answer

A stock dividend involves the distribution of additional shares of stock to existing shareholders, rather than a cash payment. Thus, the shareholder who receives a stock dividend would own more shares of the company. The market price per share may or may not increase, depending on factors such as the company's financial performance and investors' reactions to the stock dividend. Retained earnings may increase if the company chooses to pay the dividend out of its earnings rather than issuing new shares. The legal capital of the shares would not change as a result of a stock dividend.

A Shareholder Who Receives a Stock Dividend Would