Instead of paying dividends to their stockholders, growing corporations typically
A) pay bonuses to their stockholders.
B) sell more stock to the public.
C) pay back their bank loans more quickly.
D) reinvest profits in the business.
E) provide steady income to their investors.

Question

Quizplus · Accepted Answer

Growing corporations typically reinvest profits in the business instead of paying dividends to their stockholders. This allows the company to use the profits to expand operations, invest in research and development, purchase new equipment, or acquire other companies. By doing so, the company is able to create more value for their stockholders in the long run, which can lead to higher stock prices and potential capital gains for investors.

Instead of Paying Dividends to Their Stockholders, Growing Corporations Typically