Through ﬁnancial engineering, investment dealers can replicate homemade dividends by constructing:

Question

Quizplus · Accepted Answer

Stripped common shares can replicate homemade dividends by separating the dividend cash flow from the underlying stock price. This allows investors to construct their own dividend payments by selling or holding onto the stripped cash flow. Automated dividend reinvestment plans and residual dividends do not replicate homemade dividends, while extra cash dividends and dividend creating security plans are not commonly used financial engineering techniques.

Through ﬁNancial Engineering, Investment Dealers Can Replicate Homemade Dividends by Constructing