Which action will best enable a company to raise additional equity capital?
A)Declare a stock split.
B)Begin an open-market purchase dividend reinvestment plan.
C)Initiate a stock repurchase program.
D)Begin a new-stock dividend reinvestment plan.

Question

Quizplus · Accepted Answer

Initiating a new-stock dividend reinvestment plan would enable the company to raise additional equity capital by offering shareholders the option to receive their dividends in the form of newly issued shares rather than cash. This can increase the demand for the company's stock, thereby potentially increasing the price per share and providing additional capital for the company. A stock split (Option A) would not necessarily raise additional equity capital, as it simply increases the number of shares outstanding without altering the underlying value of the company. Open-market purchase dividend reinvestment plans (Option B) and stock repurchase programs (Option C) are mechanisms for returning capital to shareholders, rather than raising new capital for the company.

Which Action Will Best Enable a Company to Raise Additional