CFA CFA Level 1 CFA Level 1 Question of the Week – Corporate Finance

CFA Level 1 Question of the Week – Corporate Finance

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    • Avatar of Matt_AnalystPrepMatt_AnalystPrep
      Participant
        • CFA Charterholder
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        1
        ::

        Which of
        the following is least likely a valid
        reason for declaring a stock dividend?

        • A. To increase total shareholders’ equity
        • B. To increase the number of shareholders
        • C. To increase shares trading volume
      • Avatar of moyomoyo
        Participant
          • Undecided
          Up
          3
          ::

          B

        • Avatar of Matt_AnalystPrepMatt_AnalystPrep
          Participant
            • CFA Charterholder
            Up
            2
            ::

            The correct answer is A.

            Stock dividends:

             · may result in an increase in shareholder base;

             · may result in a lower price that may attract new investors; and

             · do not affect the capital structure of the company, as it is a cash neutral exercise.

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