Asked by Alexia Keobangsy on Jul 02, 2024
Verified
Which of the following is the best definition of homemade dividends?
A) The market's reaction to a change in corporate dividend payout.
B) Idea that individual investors can undo corporate dividend policy by reinvesting dividends or selling shares of stock.
C) Date two business days before the date of record, establishing those individuals entitled to a dividend.
D) Payment made out of a firm's earnings to its owners, either in the form of cash or stock.
E) Payment made by a firm to its owners from sources other than current or accumulated earnings.
Homemade Dividends
The concept that investors can create their own dividend policy by selling a portion of their portfolio of equities, instead of relying on the company's dividend payments.
Dividend Payout
The part of a company's profits that is paid out to shareholders as dividends.
Corporate Dividend
The distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders.
- Comprehend the mechanism and implications of homemade dividends.
Verified Answer
BV
Brian Villa7 days ago
Final Answer :
B
Explanation :
Homemade dividends refer to the concept that investors can create their own dividend policy by either reinvesting dividends they receive or by selling a portion of their shares. This allows investors to tailor their income streams from their investments according to their own preferences, regardless of the company's actual dividend policy.
Learning Objectives
- Comprehend the mechanism and implications of homemade dividends.