Chapter 18, Problem 9DQ

Summary Introduction

To explain: The reason why stock dividend or stock split is not highly valued by investors.

Introduction:

Stock Dividend:

When a company pays dividend to its shareholders in the form of additional shares, it is termed as stock dividend. This form is generally paid out when the company has less cash reserves.

Stock split:

A corporate procedure through which the management of a company divides its current shares to increase the shares outstanding is termed as stock split. It helps in boosting the liquidity of shares.