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Are companies obligated to pay dividends on common stock?

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Are companies obligated to pay dividends on common stock? Explain.

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Solution Summary

The solution explains the two types of investment returns sought by investors in stock of corporations. It discusses dividend payments using a current stock market example for easier understanding.

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If obligated means required, the answer is no, although investors want and expect a return on their investment.

There are two kinds of returns for investors: dividends and growth in the price of the stock. Certain types of companies will purposely ...

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