The shareholder receiving a stock dividend receives a share of common stock of equal value to their existing shares of common stock.

Question

Quizplus · Accepted Answer

A stock dividend results in the shareholder receiving additional shares of the company's stock, but it does not guarantee that the new shares have an equal value to their existing shares. The value of each share typically decreases as the total number of shares increases, keeping the overall value of the shareholder's investment relatively constant.

The Shareholder Receiving a Stock Dividend Receives a Share of Common