Question

A 100% stock dividend and a 2-for-1 stock split will result in the same number of...

A 100% stock dividend and a 2-for-1 stock split will result in the same number of shares of stock being held by investors after the transaction is completed.

True or False?

As long as a firm has a positive level of retained earnings, it can pay a dividend.

True or false?

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Answer #1

1. TRUE

A 100% stock dividend means that there will be 1 more share given for every 1 share held. A 2 for 1 stock split means that a share will be divided into 2 shares. So. in both cases there will 2 shares for every singke share held. It means a 100% stock dividend and 2 for 1 stock split will result in the same number of shares of stock being held by investors after the transaction is completed.

2. TRUE

As long as a firm has a positive level of retained earnings, it can pay a dividend.

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