A dividend reinvestment plan enables stockholders to

Question

Quizplus · Accepted Answer

A dividend reinvestment plan allows stockholders to automatically reinvest their dividends in additional shares of the company's stock, typically with little or no transaction costs. This can help investors compound their returns over time by buying more shares without having to actively manage their portfolio. Option A is incorrect because dividend reinvestment typically results in an increase in equity. Option B is incorrect because there is no redemption of stock involved. Option D is incorrect because dividend reinvestment plans typically reinvest dividends in the company's stock, not money market instruments.

A Dividend Reinvestment Plan Enables Stockholders to