C的解释没看明白

问题如下：

A stock dividend:

选项：

A.is relevant for valuation of a company. B.involves a reduction in the number of shares outstanding. C.does not affect the shareholders' proportional ownership in the company.

解释：

Solution

1. Incorrect because stock dividends are not relevant for valuation.

2. Incorrect because a stock dividend is a type of dividend in which a company distributes additional shares of its common stock (typically, 2%–10% of the shares then outstanding) to shareholders instead of cash. This results in an increase, not a reduction in the number of shares outstanding.

3. Correct because a stock dividend divides the “pie” (the market value of shareholders’ equity) into smaller pieces without affecting the value of the pie or any shareholder’s proportional ownership in the company.

Equity Valuation: Concepts and Basic Tools

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