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Dividend dates, stock dividend, cash dividend, stock splits, benefits of stock split

Please provide insight to the following questions:

1) What are some differences between the date of declaration and date of record for dividends?

2) As an investor, would you prefer a cash or stock dividend? Why?

3) How would the price of a stock be affected by its dividend?

4) Why do companies split their stock?

5) Are there benefits to an investor when a stock splits? Why or why not?

Solution Preview

1) What are some differences between the date of declaration and date of record for dividends?

First of all the date of declaration is the date on which the board of directors declares a dividend and the date of record is the date on which ownership of stock for the purpose of receiving a dividend is determined. On the date of declaration, an entry is recorded which establishes a liability and a reduction to retained earning for the amount of the dividend declared. On the other hand on the date of record no entry is made and the date is used to establish exactly which stockholders will receive the dividend. The lag between the declaration and record allows stockholders to complete stock transactions in progress.

2) As an investor, would you prefer a ...

Solution Summary

In a concise response, the solution presents a solid paragraph for each of the questions.

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