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Effect of 10% stock dividend

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How will your investment in Acme Corporation change if you currently own 100 shares valued at $10 each and Acme has just declared a 10% stock dividend? Before the stock dividend there were 2,000 shares outstanding.

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The expert examines the effect of 10% stock dividend is determined.

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As a part of the financing decision the dividend policy of the firm is a residual decision and the dividends are a passive residual. So long firm is able to earn more than the equity capitalization rate than the investors would be content with the firm retaining the earning. In contrast if the firm were able to earn less than the equity ...

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