Question

Question 1

Which of the following dividends does NOT actually involve the distribution of money?

A) Special Dividends

B) Liquidating Dividends

C) Stock Dividends

D) All of the dividends above involve the payment of cash to the stockholder

Question 2

Which of the following is NOT a form of a corporate dividend?

A) Regular Cash Dividend

B) Special Cash Dividend

C) Stock Dividend

D) These are all the forms of corporate dividends

Answer 1

Question 1 – Option C. Stock Dividends

Stock dividends do not involve payment of actual cash dividend from company. It is made in the form of additional shares rather than a cash payout. When the companies have shortage of its cash balance or requires cash for other purpose, it could rather pay dividends as additional stocks.

Special dividends and liquidating dividends are paid in cash. Special dividends are paid when a company has an extraordinary performance or has excess cash, without much use of it. Liquidating dividends are those which are paid when company winds up its business and sels assets. The cash received as proceeds from winding up of business is paid as dividend.

Question 2 – Option D – All are forms of Corporate Dividend

All the options mentioned are forms of dividend payments used by the corporates.