In a recent presentation, Doug Pearce made two statements about dividends: Statement 1: A stock dividend will

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In a recent presentation, Doug Pearce made two statements about dividends:

Statement 1: “A stock dividend will increase share price, all other things being equal.”

Statement 2: “One practical concern with a stock split is that it will reduce the company’s price-to-earnings ratio.”

Are Pearce’s two statements about the effects of the stock dividend and stock split correct?

A. No for both statements.

B. Yes for Statement 1 and No for Statement 2.

C. No for Statement 1 and Yes for Statement 2.

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Corporate Finance A Practical Approach

ISBN: 9781118217290

2nd Edition

Authors: Michelle R Clayman, Martin S Fridson, George H Troughton, Matthew Scanlan

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Question Posted: Mar 30, 2024 01:01 AM

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In a recent presentation, Doug Pearce made two statements about dividends: Statement 1: A stock dividend will

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The correct answer is C No for Statement 1 and Yes for Statement 2 Explanation Statement 1 A stoc...View the full answer

Corporate Finance A Practical Approach

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