Clara holds common stock in a telecommunications company. The board of directors of the company declares that each stockholder will receive 2 percent of the company's profits relative to the proportion of shares he or she holds. Thus, as a stockholder, Clara receives a sum of $4,800 out of the company's profits. In this scenario, the money that Clara has received is called _____.
A) a dividend
B) interest income
C) the principal
D) a capital gain

Question

Quizplus · Accepted Answer

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. Clara received $4,800 as her share of the company's profits, which is considered a dividend.

Clara Holds Common Stock in a Telecommunications Company