Dividends reduce the stockholder's investment in a firm.

Name: Dividends reduce the stockholder's investment in a firm.
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Question

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Dividends are payments made by a company to its shareholders out of the company's profits. Since dividends are paid to shareholders, it reduces their investment in the firm. This is because the money paid out in dividends is no longer part of the company's retained earnings, which is the sum of all past profits, and is instead distributed to shareholders.

Dividends Reduce the Stockholder's Investment in a Firm