Under dividend reinvestment plans, shareholders can automatically ____.
A) reduce their taxable income
B) increase their cash inflows
C) use dividends to purchase additional shares
D) transfer from retained earnings accounts to equity accounts.

Question

Quizplus · Accepted Answer

Under dividend reinvestment plans, shareholders can use their dividends to purchase additional shares instead of receiving cash payments. This allows for the automatic growth of their investment without incurring transaction fees or commissions. It does not have any direct impact on reducing taxable income or increasing cash inflows. It also does not involve transfers from retained earnings accounts to equity accounts, as this is done at the company's discretion.

Under Dividend Reinvestment Plans, Shareholders Can Automatically ____