A dividend reinvestment plan (DRIP)differs from a stock dividend in which way?
A) DRIPs allow investors to use dividends to buy new shares, while a stock dividend is a dividend paid in additional shares.
B) Stock dividends allow shareholders to purchase additional shares with their dividends at a special discount, whereas a DRIP allows shareholders to purchase shares at the market price.
C) DRIPs allow shareholders to buy additional shares at a discount, whereas with a stock dividend shareholders receive no discount.
D) Stock dividends are voluntary whereas DRIPs are mandatory.

Question

Quizplus · Accepted Answer

A DRIP allows investors to use their dividend payments to purchase new shares, while a stock dividend is paid in additional shares. The main difference is that with a DRIP, investors have a choice to reinvest their dividends in new shares, while with stock dividends, they receive additional shares as a reward for holding the stock.

A Dividend Reinvestment Plan (DRIP)differs from a Stock Dividend in Which