In a recent presentation, Doug Pearce made two statements about dividends: Statement 1: A stock dividend will
Question:
In a recent presentation, Doug Pearce made two statements about dividends:
Statement 1: “A stock dividend will increase share price, all other things being equal.”
Statement 2: “One practical concern with a stock split is that it will reduce the company’s price-to-earnings ratio.”
Are Pearce’s two statements about the effects of the stock dividend and stock split correct?
A. No for both statements.
B. Yes for Statement 1 and No for Statement 2.
C. No for Statement 1 and Yes for Statement 2.
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Step by Step Answer:
The correct answer is C No for Statement 1 and Yes for Statement 2 Explanation Statement 1 A stoc...View the full answer
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Related Book For 
Corporate Finance A Practical Approach
ISBN: 9781118217290
2nd Edition
Authors: Michelle R Clayman, Martin S Fridson, George H Troughton, Matthew Scanlan
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