A dividend is a pro rata distribution of a portion of a corporation's retained earnings to its shareholders.

Question

Quizplus · Accepted Answer

A dividend is indeed a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. The distribution is typically made in cash (cash dividend) or in additional shares of the company (stock dividend) and is based on the number of shares each shareholder owns, thus making it a pro rata distribution.

A Dividend Is a Pro Rata Distribution of a Portion