Equal shares of a ﬁrm's proﬁt are paid out to stockholders as
A) interest.
B) dividends.
C) capital gains.
D) net earnings.

Question

Quizplus · Accepted Answer

Dividends are the distribution of a portion of the company's earnings to shareholders, typically in cash form. This satisfies the condition of equal shares of profits being paid out to stockholders. The other choices are not correct because interest is a fixed payment made to creditors, capital gains are the increase in value of an asset and net earnings are the total profit or loss of a company after accounting for all expenses.

Equal Shares of a ﬁRm's Proﬁt Are Paid Out to Stockholders