A 10% stock dividend is the equivalent of a $1000 par value bond paying annual interest of 10%.

Question

Quizplus · Accepted Answer

A 10% stock dividend means that the shareholder will receive an additional 10% worth of stocks, but this does not necessarily mean an increase in income or dividends received. On the other hand, a $1000 par value bond paying annual interest of 10% means that the bondholder will receive a fixed income of $100 annually. These are two different forms of investment with different ways of generating returns.

A 10% Stock Dividend Is the Equivalent of a $1000