A dividend reinvestment plan _________on the security.
A) has an undetermined effect
B) decreases the return
C) increases the return
D) has no effect on the return

Question

A dividend reinvestment plan _________on the security. 
A) has an undetermined effect
B) decreases the return
C) increases the return
D) has no effect on the return

Quizplus · Accepted Answer

A dividend reinvestment plan (DRIP) takes any dividends earned from a company and automatically reinvests them back into purchasing more shares of the company's stock. This means that over time, the investor will accumulate more shares of the stock without having to pay any additional transaction fees. By reinvesting dividends back into the stock, the investor benefits from compound growth, leading to an increased return.

A Dividend Reinvestment Plan _________On the Security