Los 46.b

Question 1

What are cash dividends?

Answer 1

Cash payments made to shareholders, either regularly scheduled or as one-time special dividends.

Question 2

What are special dividends?

Answer 2

One-time cash payments made to shareholders in addition to regular dividends, often used by cyclical firms during periods of high profitability. Also known as extra or irregular dividends.

Question 3

What are stock dividends?

Answer 3

Dividends paid out in new shares of stock rather than cash. More shares outstanding, lower price per share, but no change in total shareholder equity.

Question 4

What are stock splits?

Answer 4

Dividing each existing share into multiple shares. More shares outstanding, lower price per share, but no change in shareholder wealth. More common than stock dividends.

Question 5

What are reverse stock splits?

Answer 5

Opposite of stock splits. Fewer shares outstanding, higher stock price, but no change in shareholder wealth.

Question 6

What are share repurchases?

Answer 6

A company buying back its own shares. An alternative to cash dividends, with the same effect on shareholder wealth.
Used to support share price, signal undervaluation, or offset increases in outstanding shares from employee stock options.