Farrah owns 5,000 shares of stock in DAS,Inc.with a market value of $15,000.DAS declares a 20% stock dividend.After the dividend is paid,Farrah owns
A) 6,000 shares with a market value of $18,000.
B) 6,000 shares with a market value of $15,000.
C) 5,100 shares with a market value of $15,300.
D) 5,000 shares with a market value of $18,000.

Question

Quizplus · Accepted Answer

A 20% stock dividend on 5,000 shares gives Farrah an additional 1,000 shares (20% of 5,000), totaling 6,000 shares. However, the market value of the total shares remains the same at $15,000, as stock dividends distribute additional shares to shareholders without changing the total market value of the company.

Farrah Owns 5,000 Shares of Stock in DAS,Inc