A 10% stock dividend is the equivalent of a $1,000 par value bond paying annual interest of 10%.

Question

Quizplus · Accepted Answer

A stock dividend and a bond are two different types of securities and cannot be directly compared. A stock dividend involves the distribution of additional shares of stock to existing shareholders, while a bond pays interest to bondholders. The value of a stock dividend depends on the current market price of the stock, while the value of a bond is fixed at its par value. Therefore, a 10% stock dividend cannot be equated to a $1,000 par value bond paying annual interest of 10%.

A 10% Stock Dividend Is the Equivalent of a $1,000