A corporation that has an automatic reinvestment plan:
A) forces shareholders to automatically reinvest dividends in the company.
B) never physically pays out declared dividends.
C) helps investors plan their investment portfolio.
D) gives shareholders the option to automatically reinvest dividends in the company.

Question

Quizplus · Accepted Answer

A corporation with an automatic reinvestment plan gives its shareholders the option to automatically reinvest dividends in the company. This means that instead of receiving a physical payout of the declared dividends, the shareholder's dividends are used to purchase additional shares in the company. This can be a helpful tool for investors who want to grow their investment portfolio and potentially earn more income in the future. However, it is important for investors to carefully consider their investment goals and the potential risks before participating in an automatic reinvestment plan.

A Corporation That Has an Automatic Reinvestment Plan