Question

Assume you own 300 shares of ABC stock and recieve a stock dividend of 5%. As a result, the number of shares you own will change to _____ shraes while your total wealth will increase by ____ percent.
A. 305; 5

B. 315: 0

C. 305; 0

D. 315; 5

E. 300; 5

Answer 1

Answer:

correct option is B. 315: 0

Explanation:

given data

existing share = 300 shares

stock dividend = 5%

to find out

number of shares you own will change and total wealth will increase by

solution

we get here new no of share that is express as

new no of share = existing share + ( stock dividend × existing share )    ...........1

put here value we get

new no of share = 300 + ( 5% ×300 )

new no of share = 300 + 15

new no of share = 315

and

stock dividend is not increase either company wealth or the stockholder wealth

so no of share increase with decrease per share

so that there is no change in wealth

so correct option is B. 315: 0