What is the economic difference between a stock dividend and a stock split?
A) Stock splits create greater economic benefits to shareholders than stock dividends.
B) Stock splits increase EPS more than stock dividends.
C) There is no economic difference between a stock dividend and a stock split.
D) Stock dividends create greater economic benefits to shareholders than stock splits.

Question

Quizplus · Accepted Answer

A stock dividend and a stock split both involve the distribution of additional shares of stock to shareholders, but they do not have any direct economic impact on the value of a company or the value of a shareholder's stake in the company. Therefore, there is no economic difference between a stock dividend and a stock split. However, a stock split may result in increased liquidity in the market for the stock and may make it more affordable for individual investors to purchase shares, which could indirectly affect the value of the stock over time.

What Is the Economic Difference Between a Stock Dividend and a Stock