Revol-Tech is a technology company with excellent growth prospects. The company wishes to do something to acknowledge the loyalty of its shareholders but needs all of its available cash to fund its rapid growth. The market price of the stock is currently trading at the upper end of its preferred trading range. The company is most apt to consider which one of the following in this situation?
A) Liquidating dividend
B) Stock split
C) Reverse stock split
D) Extra cash dividend
E) Special cash dividend

Question

Quizplus · Accepted Answer

Given that Revol-Tech needs all of its available cash to fund its rapid growth, options involving cash payouts (liquidating dividend, extra cash dividend, special cash dividend) are less likely. A stock split does not involve cash outflow and can make the stock price appear more accessible if it's currently at the upper end of its preferred trading range, thus acknowledging shareholder loyalty without impacting the company's cash reserves.

Revol-Tech Is a Technology Company with Excellent Growth Prospects